UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended ~~June~~September 30, 2024.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from _______________ to ______________

Commission File Number: 000-13215

AiADVERTISING, INC.

(Exact name of registrant as specified in its charter)

Nevada		30-0050402
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1114 S. St. Mary’s Street #120, San Antonio, TX 78210

(Address of principal executive offices) (Zip Code)

(~~917~~973) ~~273~~-~~8429~~818-2879

Registrant’s telephone number, including area code.

Securities registered pursuant to Section 12(b) of the Act: None

Tile of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☐ No ☒

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large-accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~November~~December 12, 2024, the number of shares outstanding of the registrant’s common stock, par value $0.001, was 1,344,231,504.

Table of Contents

		~~Page~~	Page
PART I – FINANCIAL INFORMATION		1
Item 1.	Consolidated Financial Statements	1	1
	Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited), and December 31, 2023 (audited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2024 (unaudited), and December 31, 2023		1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (unaudited)	2
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (unaudited)		2
	Condensed Consolidated Statement of Shareholders’ Equity (Deficit) for the three and six months ended June 30, 2024 and 2023 (unaudited)	3
	Condensed Consolidated Statements of Shareholders’ equity (deficit) for the three and nine months ended September 30, 2024 and 2023 (unaudited)		3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (unaudited)		4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26	27
Item 4.	Controls and Procedures	26	27
PART II - OTHER INFORMATION		27
Item 1.	Legal Proceedings	27	28
Item 1A.	Risk Factors	27	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27	28
Item 3.	Defaults Upon Senior Securities	27	28
Item 4.	Mine Safety Disclosures	27	28
Item 5.	Other Information	27	28
Item 6.	Exhibits	27	28
Signatures		28	29

PART I. - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2024			December 31, 2023
	September 30, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Current assets
Cash	$	465,957		$	110,899
Cash and cash equivalents	$	630		$	110,899
Accounts receivable, net		~~504~~981,~~827~~914			517,344
Prepaid and other current Assets		~~104~~102,~~379~~711			58,982
Total current assets		1,~~075~~085,~~163~~255			687,225
Property and equipment, net		5852,~~776~~792			72,948
Right-of-Use assets		125,692			147,480
Right-of-use asset		116,910			147,480
Other assets:
Other assets
Lease deposit		10,369			8,939
Security deposits		10,369			8,939
Goodwill and other intangible assets, net		-			20,202
Goodwill and other intangible asset, net		-			20,202
Total other assets		10,369			29,141
Total assets		1,270,000			936,794
TOTAL ASSETS		1,265,326			936,794
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Current liabilities
Accounts payable	$	1,~~245~~581,~~529~~094		$	1,567,751
Accrued expenses		~~216~~229,~~652~~964			46,430
Operating lease liability		37,~~657~~393			33,572
Deferred revenue and customer deposit		~~781~~1,~~399~~119,001			533,386
Total current liabilities		2,~~281~~967,~~237~~452			2,181,139
Operating lease obligation, net of current portion		9385,~~868~~516			113,907
Total liabilities		23,~~375~~052,~~105~~968			2,295,046
Shareholders’ deficit:
Commitment and Contingencies
Shareholders’ deficit
Preferred stock, $0.001 par value; 5,000,000 Authorized shares:
Series A Preferred stock; 10,000 authorized; zero shares issued and outstanding		-			-
Series A Preferred stock; $0.001 par value; 10,000 authorized shares; zero shares issued and outstanding		-			-
Series B Preferred stock; 25,000 authorized; 18,025 shares issued and outstanding		18			18
Series B Preferred stock; $0.001; 25,000 authorized shares; 18,025 shares issued and outstanding		18			18
Series C Preferred stock; 25,000 authorized; 14,425 shares issued and outstanding		14			14
Series C Preferred stock; $0.001 par value; 25,000 authorized; 14,425 shares issued and outstanding		14			14
Series D Preferred stock; 90,000 authorized; 86,021 and 90,000 shares issued and outstanding		86			86
Series D Preferred stock; $0.001 par value; 90,000 authorized shares; 86,021 and 90,000 shares issued and outstanding as of September 30, 2024 and December 31, respectively		86			86
Series E Preferred stock; 10,000 authorized; 10,000 shares issued and outstanding		10			10
Series E Preferred stock; $0.001 par value, 10,000 authorized; 10,000 shares issued and outstanding		10			10
Series F Preferred stock; 800,000 authorized; zero shares issued and outstanding		-			-
Series F Preferred stock; $0.001 par value, 800,000 authorized shares; zero shares issued and outstanding		-			-
Series G Preferred stock; 2,600 authorized; 2,597 shares issued and outstanding		3			3
Series G Preferred stock; $0.001 per share; 2,600 authorized shares; 2,597 shares issued and outstanding		3			3
Series H Preferred stock; 1,000 authorized; zero shares issued and outstanding		-			-
Series H Preferred stock; $0.001 par value; 1,000 authorized shares; zero shares issued and outstanding		-			-
Series I Preferred stock; 3,000,000 authorized; 2,272,727 shares issued and outstanding		2,273			2,273
Series I Preferred stock; $0.001 par value; 3,000,000 authorized shares; 2,272,727 and zero shares issued and outstanding		2,273			2,273
Series J Preferred stock; 700 authorized; zero shares issued and outstanding		-			-
Series J Preferred stock; $0.001 par value; 700 authorized shares; zero shares issued and outstanding		-			-
Series K Preferred stock; 1,000 authorized; zero shares issued and outstanding		-			-
Series K Preferred stock; $0.001 par shar; 1,000 authorized shares; zero shares issued and outstanding		-			-
Common stock, $0.001 par value; 10,000,000,000 and 2,000,000,000 authorized shares; 1,344,231,504 and 1,175,324,203 shares issued and outstanding, respectively		1,344,238			1,334,415
Common stock, $0.001 par value; 10,000,000,000 and 2,000,000,000 authorized shares; 1,344,231,504 and 1,134,408,773 shares issued and outstanding, respectively		1,344,238			1,334,415
Additional paid in capital		57,933,119			56,865,961
Additional paid-in capital		58,237,559			56,865,961
Common stock payable, consisting of 5,000,000 shares valued at $0.1128		564,000			564,000
Common stock payable, consisting of 5,000,000 shares valued at $0.1128 per share		564,000			564,000
Preferred stock payable, consisting of 892,857 shares of Series I Preferred stock valued at $2.80		2,500,000			-
Preferred stock payable, consisting of 892,857 shares of Series I Preferred stock valued at $2.80 per share		2,500,000			-
Accumulated deficit		(6364,~~448~~435,~~866~~843	)		(60,125,032	)
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		(1,105,105	)		(1,358,252	)
Total shareholders’ deficit		(1,787,642	)		(1,358,252	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	1,270,000		$	936,794
TOTAL LIABILITIES AND SHAREHOLDERS DEFICIT	$	1,265,326		$	936,794

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
Revenues	$	2,236,899		$	2,089,536		$	6,563,951		$	5,858,329
Revenue	$	2,307,729		$	1,594,041		$	4,327,052		$	3,768,793
Cost of revenues		1,857,465			1,999,019			6,112,604			5,608,404
Cost of Revenue		2,459,866			1,953,936			4,255,139			3,609,385
Gross profit		379,434			90,517			451,347			249,925
Gross Profit (loss)		(152,137	)		(359,895	)		71,913			159,408
Operating expenses
Sales, general, and administrative expenses		1,~~306~~366,~~990~~830			1,~~965~~624,~~349~~662			34,~~371~~738,~~647~~477			34,~~367~~992,~~945~~607
Impairment of intangible assets		-			-			20,202			-
Impairment on intangible asset								20,202
Total operating expenses		1,~~306~~366,~~990~~830			1,~~965~~624,~~349~~662			34,~~391~~758,~~849~~679			34,~~367~~992,~~945~~607
Loss from operations		(1987,~~459,127~~396	)		(21,~~325~~534,~~244~~145	)		(34,~~319~~307,~~936~~332	)		(34,~~208~~742,~~537~~682	)
Other income (expense):
Other income (expense)
Other income (expense)		~~(3,898~~419	)		~~435,021~~-			(3,~~898~~479	)		~~435,026~~-
Total other income (expense)		(3,898	)		435,021			(3,898	)		435,026
Employee retention credit		-			-			-			435,026
Loss from operations before income taxes		(1,463,025	)		(1,890,223	)		(3,323,834	)		(2,773,511	)
Total other income (expense)		419			-			(3,479	)		435,026
Loss from operations before income taxes		(986,977	)		(1,534,145	)		(4,310,811	)		(4,307,656	)
Provision for income taxes		-			-			-			-
Net Loss		(1,463,025	)		(1,890,223	)		(3,323,834	)		(2,773,511	)
Net loss		(986,977	)		(1,534,145	)		(4,310,811	)		(4,307,656	)
Dividends on preferred stock		-			-			-			-
Net loss attributable to common shareholders	$	(1986,~~463,025~~977	)	$	(1,~~890~~534,~~223~~145	)	$	(34,~~323~~310,~~834~~811	)	$	(24,~~773~~307,~~511~~656	)
Net loss per share:
Net loss per share, basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted-average common shares outstanding, basic and diluted		1,349,231,505			1,329,921,400			1,345,682,415			1,281,214,213
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted-average common shares outstanding:
Basic		1,348,367,967			1,329,921,400			1,343,888,370			1,281,214,213
Diluted		1,348,367,967			1,329,921,400			1,343,888,370			1,281,214,213

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENT~~STATMEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

	Preferred Stock						Common Stock				Additional Paid-inIn			Common Stock		Preferred Stock		Accumulated
	Shares			Amount			Shares		Amount		Capital			Payable		Payable		Deficit			Total
Balance, March 31, 2023		131,068		$	131			1,315,856,715	$	1,315,863	$	50,473,550		$	564,000	$	-	$	(54,742,961	)	$	(2,389,417	)
Proceeds from issuance of preferred stock		2,272,727			2,273			-		-		4,997,727										5,000,000
Proceeds from issuance of common stock		-			-			14,620,945		14,620		28,801			-		-		-			43,421
Stock based compensation		-			-			-		-		374,098			-		-		-			374,098
Cashless exercise of stock options		-			-			3,931,113		3,931		(3,931	)		-		-		-			-
Net loss for the three months ended June 30, 2023		-			-			-		-		-			-	$	-		(1,890,223	)		(1,890,223	)
Balance, June 30, 2023		2,403,795		$	2,404			1,334,408,773	$	1,334,414	$	55,870,245		$	564,000	$	-	$	(56,633,184	)	$	1,137,879
Balance, December 31, 2022		131,068		$	131			1,175,324,203	$	1,175,330	$	49,595,914		$	564,000	$	-	$	(53,859,673	)	$	(2,524,298	)
Proceeds from issuance of preferred stock		2,272,727			2,273			-		-		4,997,727										5,000,000
Proceeds from issuance of common stock		-			-			155,153,457		155,153		444,274			-		-		-			599,427
Stock based compensation		-			-			-		-		836,261			-		-		-			836,261
Stock-based compensation		-			-			-		-		1,253,643			-		-		-			1,253,643
Cashless exercise of stock options		-			-			3,931,113		3,931		(3,931	)		-		-		-			-
Net loss for the six months ended March 31, 2023		-			-			-		-		-			-		-		(2,773,511	)		(2,773,511	)
Net loss		-			-			-		-		-			-		-		(4,307,656	)		(4,307,656	)
Balance, September 30, 2023		2,403,795		$	2,404			1,334,408,773	$	1,334,414	$	56,287,627		$	564,000	$	-	$	(58,167,329	)	$	21,116
Balance, June 30, 2023		2,403,795		$	2,404			1,334,408,773	$	1,334,414	$	55,870,245		$	564,000	$	-	$	(56,633,184	)	$	1,137,879
Balance, March 31, 2024		2,404,795		$	2,405			1,334,408,773	$	1,334,415	$	57,640,463		$	564,000	$	2,500,000	$	(61,985,841	)	$	55,442
Stock -based compensation - options		-			-			-		-		417,382			-		-		-			417,382
Stock based compensation - options		-			-			-		-		302,479			-				-			302,479
Net loss		-			-			-		-		-			-		-		(1,534,145	)		(1,534,145	)
Cashless exercise of stock options		-			-			9,822,731		9,823		(9,823	)		-		-		-			-
Balance, September 30, 2023		2,403,795		$	2,404			1,334,408,773	$	1,334,414	$	56,287,627		$	564,000	$	-	$	(58,167,329	)	$	21,116
Redemption of Series K Preferred Stock		(1,000	)		(1	)		-		-		-			-		-		-			(1	)
Net loss for the three months ended June 30, 2024		-			-			-		-		-			-				(1,463,025	)		(1,463,025	)
Balance, June 30, 2024		2,403,795		$	2,404			1,344,231,504	$	1,344,238	$	57,933,119		$	564,000	$	2,500,000	$	(63,448,866	)	$	(1,105,105	)
					-			-		-		-			-		-		-
Balance, December 31, 2023		2,403,795		$	2,404			1,334,408,773	$	1,334,415	$	56,865,961		$	564,000	$	-	$	(60,125,032	)	$	(1,358,252	)
Cash received for Series I Preferred Stock payable		-			-			-		-		-			-		2,500,000		-			2,500,000
Cashless exercise of stock options		-			-			9,822,731		9,823		(9,823	)		-		-		-			-
Preferred stock issued as compensation		1,000			1			-		-		477,446			-		-		-			477,447
Redemption of Series K Preferred Stock		(1,000	)		(1	)		-		-		-			-		-		-			(1	)
Stock based compensation - options		-			-			-		-		599,535			-		-		-			599,535
Stock- based compensation – options		-			-			-		-		903,975			-				-			903,975
Net loss for the six months ended June 30, 2024		-			-			-		-		-			-		-		(3,323,834	)		(3,323,834	)
Net loss		-			-			-		-		-			-		-		(4,310,811	)		(4,310,811	)
Balance, September 30, 2024		2,403,795		$	2,404			1,344,231,504	$	1,344,238	$	58,237,559		$	564,000	$	2,500,000	$	(64,435,843	)	$	(1,787,642	)
Balance, June 30, 2024		2,403,795		$	2,404			1,344,231,504	$	1,344,238	$	57,933,119		$	564,000	$	2,500,000	$	(63,448,866	)	$	(1,105,105	)
Stock- based compensation – options		-			-			-		-		304,440			-		-		-			304,440
Net loss ended		-			-			-		-		-			-		-		(986,977	)		(986,977	)
Balance, September 30, 2024		2,403,795		$	2,404			1,344,231,504	$	1,344,238	$	58,237,559		$	564,000	$	2,500,000	$	(64,435,843	)	$	(1,787,642	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AIADVERTISING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six			For the Six
	For the Nine Months Ended September 30,
	Months Ended			Months Ended
	June 30,			June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(3,323,834	)	$	(2,773,511	)
Net loss	$	(4,310,811	)	$	(4,307,656	)
Adjustment to reconcile net loss to net cash used in operating activities:
Loss on impairment of intangible asset		20,202			-
Depreciation and amortization		1421,~~172~~019			1624,~~099~~148
Stock based compensation		1,076,982			836,261
Stock-based compensation		1,381,422			1,253,643
Recovery of doubtful accounts		(80,469	)		-
Changes in assets and liabilities:
Accounts receivable		92(384,~~986~~101	)		(~~632~~848,~~632~~204	)
Amortization of ROU asset		21,788			-
Prepaid expenses and other assets		(45,159	)		(89,020	)
Prepaid expenses and other assets		(46,827	)		(97,783	)
Accounts payable		13,343			(689,186	)
Accounts payable		(322,222	)		(624,520	)
Accrued expenses		183,534			54,618
Accrued expenses		170,222			(15,688	)
Operating lease right-of-use asset and liability		6,000			-
Customer deposit		-			46,162
Deferred revenue and customer deposit		585,615			(341,797	)
Operating lease liability		(15,954	)		-
Net cash used in operating activities		(2,609,405	)		(4,943,454	)
Deferred revenue		248,013			-
Net cash used in operating activities		(2,144,941	)		(3,245,612	)
INVESTING ACTIVITIES
Cash paid for fixed assets		-			-
Payment of property and equipment		(863	)		-
Proceeds from sale of discontinued operations		-			-
Net cash used in financing activities		(863	)		-
Net cash provided by (used in) investing activities		-			-
FINANCING ACTIVITIES
Proceeds from sale of common stock, net		-			599,427
Proceeds from sale of preferred stock		2,500,000			5,000,000
Redemption of Series K Preferred stock		(1	)		-
Net cash provided by financing activities		2,499,999			5,599,427
Net increase in cash and cash equivalents		355,058			2,353,815
Net (decrease) increase in cash and cash equivalents		(110,269	)		655,973
Cash and cash equivalents at beginning of period		110,899			55,831
Cash and cash equivalents, beginning of period		110,899			55,831
Cash and cash equivalents at end of period	$	465,957		$	2,409,646
Cash and cash equivalents, end of period	$	630		$	711,804
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Right of use asset exchanged for lease liability	$	-		$	6,655
Right-of-use asset exchanged for lease liability	$	-		$	6,655
Exercise of stock options	$	9,823		$	3,931
Cashless exercise of stock options	$	9,823		$	3,931

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AiADVERTISING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~JUNE~~ SEPTEMBER 30, 2024

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited Consolidated Financial Statements of AiAdvertising, Inc. (“AiAdvertising,” “we,” “us,” “our,” or the “Company”) and its wholly-owned subsidiaries, have been prepared in accordance with the instructions to interim financial reporting as prescribed by the Securities and Exchange Commission (the “SEC”). The results for the interim periods are not necessarily indicative of results for the entire year. These interim financial statements do not include all disclosures required by generally accepted accounting principles (“GAAP”) and should be read in conjunction with our consolidated financial statements and footnotes in the Company’s annual report on Form 10-K filed with the SEC on September 12, 2024. In the opinion of management, the unaudited Consolidated Financial Statements contained in this report include all known accruals and adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods reported herein. Any such adjustments are of a normal recurring nature.

~~There were various updates recently issued~~Liquidity, ~~most of which represented technical corrections to the accounting literature or application to specific industries which~~ ~~the~~Capital ~~Company~~Resources ~~does~~and ~~not~~Going ~~expect to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.~~Concern

~~Going~~As of ~~Concern~~September 30, 2024, the Company had cash of $630 and a working capital deficit of $1,882,197. During the nine months ended September 30, 2024, the Company used $2,609,405 of cash in operations and incurred a net loss of $4,310,811, resulting in an accumulated deficit of $64,435,843.

~~The accompanying Consolidated~~Any ~~Financial~~additional ~~Statements~~capital ~~have~~that ~~been~~the ~~prepared~~Company onmay araise ~~going~~through ~~concern~~the ~~basis~~sale of ~~accounting,~~equity ~~which~~or ~~contemplates~~equity-backed ~~continuity~~securities ofmay ~~operations,~~dilute ~~realization~~current stockholders’ ofownership ~~assets~~percentages and ~~liabilities~~could ~~and~~also ~~commitments~~result in ~~the~~a ~~normal~~decrease ~~course~~in ofthe ~~business.~~fair ~~The~~market ~~accompanying~~value ~~Consolidated~~of ~~Financial~~AiAdvertising ~~Statements~~equity dosecurities. ~~not reflect~~The ~~any~~terms ~~adjustments~~of ~~that~~the securities ~~might~~issued ~~result~~by if the Company isin ~~unable~~future tocapital ~~continue~~transactions asmay abe ~~going~~more ~~concern.~~favorable ~~The~~to ~~Company~~new ~~does~~investors ~~not generate significant revenue,~~ and ~~has~~may ~~negative~~include ~~cash~~preferences, ~~flows~~superior voting ~~from~~rights ~~operations,~~and ~~which~~the ~~raise~~issuance ~~substantial~~of ~~doubt~~warrants ~~about~~or ~~the~~other ~~Company’s~~derivative ~~ability~~securities towhich ~~continue~~may ashave a ~~going~~ ~~concern.~~further ~~The~~dilutive ~~ability~~effect. ofFurthermore, ~~the~~any additional ~~Company~~debt toor ~~continue~~equity asor aother ~~going~~financing ~~concern~~that ~~and~~we ~~appropriateness~~may ofneed ~~using~~may ~~the~~not ~~going~~be ~~concern~~available ~~basis~~on isterms ~~dependent upon,~~favorable ~~among~~to ~~other things~~us, ~~raising~~or ~~additional~~at ~~capital~~all. ~~Historically,~~If the Company ~~has obtained funds from investors since its inception~~ ~~through~~is ~~sales~~unable ~~of our securities. The Company will also seek~~ to ~~generate~~obtain additional ~~working~~ capital ~~from increasing sales from its data sciences~~, ~~creative,~~the ~~website~~Company ~~development~~may ~~and~~have ~~digital~~to ~~advertising~~curtail ~~service~~its ~~offerings,~~growth ~~and~~plans ~~continue~~or tocut ~~pursue~~back ~~its~~on ~~business~~existing ~~plan and purposes~~business. As ~~of June 30~~Further, ~~2024,~~ the Company ~~had~~may ~~negative~~not ~~working~~be ~~capital~~able ofto ~~$1,206,074.~~continue Weoperations ~~have~~if ~~historically~~AiAdvertising ~~reported~~does ~~net~~not ~~losses,~~generate ~~and~~sufficient ~~negative~~revenues ~~cash flows~~ from operations,. ~~which~~The ~~raised substantial doubt about the~~ Company’s ~~ability~~may incur tosubstantial ~~continue~~costs ~~as a going concern~~ in ~~previous~~pursuing ~~years. The~~future ~~appropriateness~~capital offinancing, ~~using~~including ~~the~~investment ~~going~~banking ~~concern~~fees, ~~basis~~legal ~~is dependent upon~~fees, ~~among~~accounting ~~other things~~fees, ~~raising~~securities law ~~additional~~compliance ~~capital. Historically~~fees, ~~the~~ ~~Company~~printing ~~has~~and ~~obtained~~distribution ~~funds~~expenses ~~from~~and ~~investors~~other ~~since its inception through sales of our securities~~costs. The Company ~~will~~may also ~~seek~~be required to ~~generate additional~~recognize ~~working~~non-cash ~~capital~~expenses in ~~from~~connection ~~increasing~~with ~~sales~~certain ~~from~~securities ~~its~~we ~~Ai Platform~~issue, ~~creative,~~such ~~website~~as ~~development~~convertible notes and ~~digital advertising service offerings~~warrants, ~~and~~ ~~continue~~which tomay ~~pursue~~adversely ~~its~~impact ~~business~~our ~~plan~~reported ~~and purposes~~financial results.

2The accompanying Consolidated Financial Statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. ~~SUMMARY~~The OFaccompanying ~~SIGNIFICANT~~Consolidated Financial ~~ACCOUNTING~~Statements ~~POLICIES~~do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company historically does not generate significant revenues, and has negative cash flows from operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, raising additional capital. There is no assurance that the Company can obtain capital on terms that are acceptable, or at all, to the Company.

~~This summary of significant~~NOTE ~~accounting policies of AiAdvertising is presented to assist in understanding the Company’s Consolidated Financial Statements~~2. ~~The Consolidated~~SUMMARY ~~Financial~~OF ~~Statements~~SIGNIFICANT ~~and~~ACCOUNTING notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the Consolidated Financial Statements.POLICIES

~~The~~This summary ~~Consolidated~~of ~~Financial Statements~~significant ~~include~~accounting policies of AiAdvertising is presented to assist in understanding the Company’s ~~and~~Consolidated Financial ~~its~~Statements. ~~wholly~~The ~~owned~~Consolidated ~~subsidiaries~~Financial ~~CLWD~~Statements ~~Operations,~~and ~~Inc.,~~notes aare ~~Delaware~~representations ~~corporation~~of ~~(“CLWD~~the ~~Operations”)~~Company’s management, which is ~~and~~responsible ~~Giles~~for ~~Design~~their ~~Bureau,~~integrity ~~Inc~~and objectivity., aThese ~~Nevada~~accounting ~~corporation~~policies ~~(“Giles~~conform ~~Design~~to ~~Bureau”).~~accounting ~~All~~principles ~~significant~~generally ~~inter-company~~accepted ~~transactions~~in ~~are~~the ~~eliminated~~United States of America and have been consistently applied in ~~consolidation~~the preparation of the ~~financial~~Consolidated ~~statements~~Financial Statements.

~~Accounts~~The Consolidated ~~Receivable~~Financial Statements include the Company and its wholly-owned subsidiaries CLWD Operations, Inc., a Delaware corporation and Giles Design Bureau, Inc., a Nevada corporation. All significant inter-company transactions are eliminated in consolidation of the financial statements.

~~The Company extends credit to its customers, who are located nationwide.~~ Accounts ~~receivable are customer obligations due under normal trade terms. The~~ Company performs continuing credit evaluations of its customers’ financial condition. Management reviews accounts receivable on a regular basis, based on contractual terms and how recently payments have been received to determine if any such amounts will potentially be uncollected. The Company includes any balances that are determined to be uncollectible in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off. During the six months ended June 30, 2024 and 2023, the Company wrote-off uncollectible accounts in the amount of $40,624 and $0, respectively. The balance of the allowance accounts at June 30, 2024 and December 31, 2023 was $70,796 and $191,889, respectively.Receivable

5The Company extends credit to its customers, who are located nationwide. Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations of its customers’ financial condition. Management reviews accounts receivable on a regular basis, based on contractual terms and how recently payments have been received to determine if any such amounts will potentially be uncollected. The Company includes any balances that are determined to be uncollectible in its allowance for credit allowance. After all attempts to collect a receivable have failed, the receivable is written off. The balance of the credit allowance account as of September 30, 2024 and December 31, 2023 was a $65,436 and $191,899, respectively.

~~Use of Estimates~~5

~~The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities~~AiADVERTISING, ~~disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues~~ ~~and expenses during the reporting period~~INC. ~~Actual~~AND results could differ from those estimates. Estimates are primarily used in our revenue recognition, the allowance for doubtful account receivable, fair value assumptions in accounting, intangible assets and long-lived asset impairments and adjustments, the deferred tax valuation allowance, and the fair value of stock options and warrants.SUBSIDIARIES

~~Cash~~NOTES TO ~~and~~CONDENSED ~~Cash~~CONSOLIDATED ~~Equivalents~~FINANCIAL STATEMENTS - UNAUDITED

~~The Company considers all~~SEPTEMBER ~~highly liquid investments with an original maturity of three months or less to be cash equivalents. As of June~~ 30, 2024~~, the Company held cash and cash equivalents in the amount of $465,957, which was held in the Company’s operating bank accounts.~~

~~Property~~NOTE 2. ~~and~~SUMMARY ~~Equipment~~OF SIGNIFICANT ACCOUNTING POLICIES (continued)

~~Property and equipment are~~Use ~~stated~~of ~~at cost, and are depreciated or amortized using the straight-line method over the following estimated useful lives:~~Estimates

Furniture, fixtures & equipment		7 Years
Computer equipment		5 Years
Commerce server		5 Years
Computer software		3 - 5 Years
Leasehold improvements		Length of the lease

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are primarily used in our revenue recognition, the allowance for accounts receivable credit allowance, fair value assumptions in accounting, intangible asset and long-lived asset impairments and adjustments, accounts payable, accrued expenses, deferred tax valuation allowance, and the fair value of stock options.

~~Depreciation expenses were $14,172 and $16,099 for the six~~Cash ~~months ended June 30, 2024,~~ and ~~2023,~~Cash ~~respectively.~~Equivalents

~~Revenue~~The Company ~~Recognition~~considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of September 30, 2024, and December 31, 2023, the Company had cash and cash equivalents $630 and $110,899, respectively,

~~The Company recognizes income~~Property ~~when the service is provided or when product is delivered. We present revenue, net of customer incentives. Most of our income is generated from professional services~~ and site development fees. We provide online marketing services that we purchase from third parties. The gross revenue presented in our statement of operations includes digital advertising revenue. We also offer professional services such as development services. The fees for development services with multiple deliverables constitute a separate unit of accounting in accordance with ASC 606, which are recognized as the work is performed. Upfront fees for development services or other customer services are deferred until certain implementation or contractual milestones have been achieved. If we have performed work for our clients, but have not invoiced clients for that work, then we record the value of the work on the balance sheet as costs in excess of billings. The terms of services contracts generally are for periods of less than one year. The deferred revenue and customer deposits as of June 30, 2024, and December 31, 2023, were $781,399 and $533,386, respectively. The costs in excess of billings as of June 30, 2024, and December 31, 2023, was $0.Equipment

~~We always strive to satisfy~~Property ~~our customers by providing superior quality~~ and ~~service.~~equipment ~~Since~~are westated ~~typically~~at ~~bill~~cost, ~~based on a Time~~ and ~~Materials basis, there~~ are nodepreciated ~~returns for work delivered. When discrepancies~~ or ~~disagreements~~amortized ~~arise,~~using ~~we do our best to reconcile them by assessing~~ the ~~situation on a case~~straight-~~by-case basis~~line ~~and~~method ~~determining~~over ifthe ~~any~~following ~~discounts~~estimated ~~can be given. Historically, we have not granted any significant discounts.~~useful lives:

Included in revenue are costs that are reimbursed by our clients, including third party services, such as photographers and stylists, furniture, supplies, and the largest component, digital advertising. We have determined, based on our review of ASC 606-10-55-39, that the amounts classified as reimbursable costs should be recorded as gross revenue, due to the following factors:

Furniture, fixtures & equipment		7 Years
Computer equipment		5 Years
Commerce server		5 Years
Computer software		3 - 5 Years
Leasehold improvements		Shorter of useful life or length of the lease

●Depreciation and ~~The~~amortization ~~Company~~expense iswas ~~primarily~~$6,847 inand ~~control~~$8,049 offor the ~~inputs~~three ofmonths ~~the~~ended ~~project~~September 30, 2024 and ~~responsible~~2023, respectively. Depreciation and amortization expense was $21,019 and $24,148 for the ~~completion~~nine ofmonths ~~the~~ended ~~client~~September ~~contract;~~30, 2024 and 2023, respectively.

~~● We have discretion in establishing price; and~~Revenue Recognition

●The Company Werecognizes income when the service is provided or when product is delivered. AiAdvertising presents revenue, net of customer incentives. Most of the Company’s income is generated from professional services and site development fees. The Company provides online marketing services that the Company purchases from third-parties. The gross revenue presented in the Company’s condensed consolidated statement of operations includes digital advertising revenue. AiAdvertising also offer professional services such as development services. The fees for development services with multiple deliverables constitute a separate unit of accounting in accordance with ASC 606, which are recognized as the work is performed. Upfront fees for development services or other customer services are deferred until certain implementation or contractual milestones have ~~discretion~~been achieved. If AiAdvertising performed work for our clients, but have not invoiced clients for that work, then the Company records the values of the work on the accompanying balance sheet as costs in ~~supplier~~excess ~~selection~~of billings. The terms of service contracts generally are for periods of less than one year.

~~Research and Development~~Deferred Revenue

~~Research~~Deferred revenue ~~and~~is ~~development costs~~a current ~~are~~liability ~~expensed~~reported ason ~~incurred.~~the ~~Total~~Company’s ~~research~~accompanying ~~and~~balance ~~development~~sheets ~~costs~~that ~~were~~reflects ~~$147,205~~revenue ~~and~~that ~~$141,260~~has ~~for~~not ~~the~~been earned ~~six~~and ~~months~~represents ~~ended~~products ~~June~~or ~~30,~~services ~~2024, and~~that ~~2023,~~are ~~respectively~~owed to a customer.

~~Advertising Costs~~Customer Deposits

~~The~~Customer deposits ~~Company~~represent ~~expenses~~funds received funds from a client before the ~~cost~~ delivery of ~~advertising~~goods ~~and~~or ~~promotional~~the ~~materials~~provision ~~when~~of ~~incurred~~services. ~~Total~~Such ~~advertising~~amounts ~~costs~~are ~~were~~recorded as ~~$236,797~~customer ~~and~~deposits ~~$64,391~~on ~~for~~ the ~~six~~accompanying ~~months~~balance ~~ended~~sheets as a current liability. This liability reflects the Company’s obligation ~~June~~to ~~30,~~either ~~2024,~~return ~~and~~the ~~2023,~~funds ~~respectively~~or fulfill the contract.

~~Fair~~AiADVERTISING, INC. ~~Value~~AND ~~of Financial Instruments~~SUBSIDIARIES

~~The Company’s financial~~NOTES ~~instruments,~~TO ~~including~~CONDENSED ~~cash~~CONSOLIDATED ~~and~~FINANCIAL ~~cash~~STATEMENTS ~~equivalents,~~- ~~accounts receivable, accounts payable, and accrued liabilities are carried at cost, which approximates their fair value, due to the relatively short maturity of these instruments.~~UNAUDITED

~~Fair value is defined as~~SEPTEMBER ~~the price to sell an asset or transfer a liability~~30, between market participants at the measurement date. Fair value measurements assume that the asset or liability is (1) exchanged in an orderly manner, (2) the exchange is in the principal market for that asset or liability, and (3) the market participants are independent, knowledgeable, able and willing to transact an exchange. Fair value accounting and reporting establishes a framework for measuring fair value by creating a hierarchy for observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements. Considerable judgment is required to interpret the market data used to develop fair value estimates. As such, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current exchange. The use of different market assumptions and/or estimation methods could have a material effect on the estimated fair value.2024

~~ASC Topic 820 established~~NOTE ~~a nine-tier fair value hierarchy which prioritizes the inputs used in measuring fair value~~2. ~~The~~SUMMARY ~~hierarchy~~OF ~~gives~~SIGNIFICANT ~~the~~ACCOUNTING ~~highest~~POLICIES ~~priority to unadjusted quoted prices in active markets for identical assets or liabilities~~ (~~level 1measurements~~continued) ~~and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:~~

●Deferred revenue ~~Level~~and customer deposits as of September 30, 2024, and December 31, 2023, were $1,119,001 ~~defined~~and as$533,386, ~~observable~~respectively. ~~inputs~~Costs ~~such~~in excess of billings as ~~quoted~~of ~~prices~~September ~~for~~30, ~~identical~~2024, ~~instruments~~and inDecember ~~active~~31, ~~markets;~~2023, were $0 and $0, respectively.

●The Company ~~Level~~strives 2,to ~~defined~~satisfy asour ~~inputs~~customers ~~other~~by ~~than~~providing ~~quoted~~superior ~~prices~~quality inand ~~active~~service. ~~markets~~Since ~~that~~the Company typically invoices based on a time and materials basis, there are ~~either~~no ~~directly~~returns for work delivered. When discrepancies or ~~indirectly~~disagreements ~~observable~~arise, ~~such~~the asCompany ~~quoted~~does ~~prices~~its ~~for~~best ~~similar~~to reconcile ~~instruments~~them inby ~~active~~assessing ~~markets~~the orsituation ~~quoted~~on ~~prices~~a ~~for~~case-by-case ~~identical~~basis orand ~~similar~~determining ~~instruments~~if inany ~~markets~~discounts ~~that~~can ~~are~~be given. Historically, the Company has not ~~active;~~granted ~~and~~any significant discounts.

●Included in ~~Level~~revenue 3are costs that are reimbursed by the Company’s clients, ~~defined~~including asthird-party ~~unobservable~~services, ~~inputs~~such inas ~~which~~photographers ~~little~~and orstylists, furniture, nosupplies, ~~market~~and ~~data~~the ~~exists~~largest component, ~~therefore~~digital ~~requiring~~advertising. anBased ~~entity~~on- tothe ~~develop~~guidance ~~its~~in ~~own~~ASC ~~assumptions~~606-10-55-39, ~~such~~the asCompany ~~valuations~~has ~~derived~~determined that ~~from~~amounts ~~valuation~~classified ~~techniques~~as inreimbursable ~~which~~costs ~~one~~should orbe ~~more~~recorded ~~significant~~as ~~inputs~~gross orrevenues, ~~significant~~due ~~value~~to ~~drivers~~the ~~are~~following ~~unobservable.~~factors:

~~Impairment~~● The Company is primarily in control of ~~Long-Lived~~the ~~Assets~~inputs of the project and responsible for the completion of the client’s contract;

● The Company ~~reviews~~has ~~its~~discretion ~~long-lived assets for impairment whenever events or changes~~ in ~~circumstances~~establishing indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value. Fair value is determined by an evaluation of available price; ~~information at which assets could be bought or sold, including quoted market prices, if available, or the present value of the estimated future cash flows based on reasonable~~ and ~~supportable assumptions.~~

~~Indefinite~~● ~~Lived~~The ~~Intangibles~~Company has discretion in supplier selection.

~~The Company accounts for~~Research ~~business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible~~ and identified intangible assets acquired and liabilities assumed based on their estimated fair values. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.Development

~~The~~Research and ~~Company~~development ~~tests~~costs ~~for~~are ~~indefinite lived~~expensed ~~intangibles~~as incurred. Research and ~~goodwill~~development ~~impairment~~costs inincludes ~~the~~software ~~fourth~~cost. ~~quarter~~Research and development primarily consist of ~~each~~software ~~year~~costs. Research and ~~whenever~~development ~~events~~expenses orfor ~~circumstances~~the ~~indicate~~three ~~that~~months ~~the~~ended ~~carrying~~September 30, 2024 and 2023 were $29,900 and ~~amount~~$85,700, ofrespectively. Research and development costs for the ~~asset~~nine ~~exceeds~~months ~~its~~ended ~~fair~~September ~~value~~30, 2024 and ~~may~~2023 ~~not~~were be$266,700 ~~recoverable~~and $ 285,900, respectively.

7Advertising Costs

The ~~impairment test conducted~~ byCompany expenses the ~~Company~~cost ~~includes~~of aadvertising ~~two-step~~and ~~approach~~promotional tomaterials ~~determine~~when ~~whether~~incurred. itAdvertising iscosts ~~more~~for ~~likely~~the ~~than~~three ~~not~~months ~~that~~ended ~~impairment~~September 30, ~~exists.~~2024 Ifand it2023 iswere ~~determined~~$165, ~~after~~153 ~~step~~and ~~one~~$124,925, ~~that~~respectively. itAdvertising iscosts ~~not~~for ~~more~~the ~~likely~~nine ~~than~~months ~~not,~~ended ~~that~~September ~~impairment exists~~30, ~~then~~2024 noand ~~further~~2023 ~~analysis~~were $373,347 isand ~~conducted.~~$189,316 ~~The steps are as follows:~~respectively.

1.Fair Value ~~Based on the totality~~ of ~~qualitative~~Financial ~~factors, determine whether the carrying amount of the intangible asset may not be recoverable. Qualitative factors and key assumptions reviewed include the following:~~Instruments

●The Company’s ~~Increases~~carrying invalue ~~costs,~~of ~~such~~certain asfinancial ~~labor~~instruments, ~~materials~~includes orcash ~~other~~and ~~costs that could negatively affect future~~ cash ~~flows.~~equivalents, ~~The~~accounts ~~Company assumed that costs associated with labor~~receivable, ~~materials,~~accounts payable, and ~~other~~accrued ~~costs~~liabilities, ~~should~~are becarried ~~consistent~~at ~~with~~cost, ~~fair~~approximated ~~market levels. If the costs were materially higher than~~ fair ~~market levels~~value, ~~then~~due ~~such~~to ~~costs may adversely affect~~ the ~~future~~relatively ~~cash~~short ~~flows~~maturity of ~~the~~these ~~Company or reporting units~~instruments.

●Fair value ~~Financial~~is ~~performance,~~defined ~~such~~ as ~~negative~~the orprice ~~declining~~to ~~cash~~sell ~~flows,~~an asset or ~~reductions~~transfer ina ~~revenue~~liability, ~~may~~between ~~adversely~~market ~~affect~~participants ~~recoverability~~at of the ~~recorded~~measurement date. Fair value measurements ofassume that the ~~intangible~~asset ~~assets.~~or ~~During~~liability ~~our~~is ~~analysis~~(1) exchanged in an orderly manner, (2) the ~~Company~~exchange ~~assumes~~is ~~that~~in ~~revenues~~the ~~should~~principal ~~remain~~market ~~relatively~~for that ~~consistent~~asset or ~~show~~liability, ~~gradual~~and ~~growth~~(3) ~~month-to-month~~the market participants are independent, knowledgeable, able and ~~quarter-~~willing to~~-quarter~~ transact an exchange. IfFair value weaccounting ~~report~~and ~~revenue~~reporting ~~declines,~~establishes ~~instead~~a offramework ~~increases~~for ormeasuring ~~flat~~fair ~~levels,~~value ~~then~~by ~~such~~creating ~~condition~~a ~~may~~hierarchy ~~adversely~~for ~~affect~~observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements. Considerable judgment is required to interpret the ~~future~~market ~~cash~~data ~~flows~~used to develop fair value estimates. As such, the estimates presented herein are not necessarily indicative of the ~~Company~~amounts that could be realized in a current exchange. The use of different market assumptions and/or ~~reporting~~estimation ~~units~~methods could have a material effect on the estimated fair value.

●Accounting Standards ~~Legal,~~Codification ~~regulatory,~~(“ASC”) ~~contractual,~~ASC ~~political,~~Topic ~~business~~820 orestablished ~~other~~a ~~factors~~nine-tier ~~that~~fair ~~could~~value ~~affect~~hierarchy ~~future~~which ~~cash~~prioritizes ~~flows. During our analysis,~~ the ~~Company~~inputs ~~assumes~~used in ~~that~~measuring ~~the~~fair ~~legal,~~value. ~~regulatory,~~The ~~political~~hierarchy orgives ~~business~~the ~~conditions~~highest ~~should~~priority ~~remain~~to ~~consistent,~~unadjusted ~~without~~quoted ~~placing~~prices ~~material~~in ~~pressure~~active onmarkets ~~the~~for ~~Company~~identical assets or ~~any~~liabilities of(level ~~its~~1measurements) ~~reporting~~and ~~units.~~the Iflowest ~~such~~priority ~~conditions were~~ to ~~become~~unobservable ~~materially~~inputs ~~different~~(level ~~than~~3 ~~what~~measurements). ~~has~~These ~~been~~tiers ~~experienced historically, then such conditions may adversely affect the future cash flows of the Company or reporting units.~~include:

● ~~Entity-specific~~Level ~~events~~1, ~~such~~defined as ~~losses~~observable ofinputs ~~management,~~such ~~key~~as ~~personnel,~~quoted orprices ~~customers,~~for ~~may~~identical ~~adversely~~instruments ~~affect~~in ~~future~~active cash flows. During our analysis, the Company assumes that members of management, key personnel, and customers will remain consistent period-over-period. If not effectively replaced, the loss of members of management and key employees could adversely affect operations, culture, morale and overall success of the company. In addition, if material revenue from key customers is lost and not replaced, then future cash flows will be adversely affected.markets;

● ~~Industry~~Level ~~or market considerations~~2, ~~such~~defined as ~~competition,~~inputs ~~changes~~other inthan ~~the~~quoted ~~market,~~prices ~~changes~~ in ~~customer~~active ~~dependence~~markets onthat ~~our~~are ~~service~~either ~~offerings,~~directly or ~~obsolescence~~indirectly ~~could~~observable ~~adversely~~such ~~affect~~as ~~the~~quoted ~~Company~~prices orfor ~~its~~similar ~~reporting~~instruments ~~units.~~in Weactive ~~understand that the~~ markets weor ~~serve~~quoted ~~are~~prices ~~constantly~~for ~~changing,~~identical ~~requiring~~or ussimilar toinstruments ~~change~~in ~~with~~markets ~~them. During our analysis, we assume~~ that weare ~~will address new opportunities in service offering and industries served. If we do~~ not ~~make~~active; ~~such changes, then we may experience declines in revenue~~ and ~~cash flow, making it difficult to re-capture market share.~~

● ~~Macroeconomic~~Level ~~conditions~~3, ~~such~~defined as ~~deterioration~~unobservable inputs in ~~general~~which ~~economic~~little ~~conditions~~ or ~~limitations~~no onmarket ~~accessing~~data ~~capital~~exists, ~~could~~therefore ~~adversely~~requiring ~~affect~~an ~~the~~entity ~~Company.~~to ~~During~~develop ~~our~~its ~~analysis,~~own ~~we acknowledge that macroeconomic factors~~assumptions, such as ~~the~~valuations ~~economy,~~derived ~~may~~from ~~affect~~valuation ~~our~~techniques ~~business plan because our customers may reduce budgets for our services. If there are material worsening~~ in ~~economic conditions,~~ which ~~lead~~one toor ~~reductions~~more insignificant ~~revenue~~inputs ~~then~~or ~~such~~significant ~~conditions~~value ~~may~~drivers ~~adversely~~are ~~affect the Company~~unobservable.

~~2. Compare the carrying amount of the intangible asset to the fair value.~~7

3AiADVERTISING, INC. IfAND ~~the carrying amount is greater than the fair value, then the carrying amount is reduced to reflect fair value.~~SUBSIDIARIES

~~Intangible assets are comprised~~NOTES ofTO ~~the~~CONDENSED ~~following,~~CONSOLIDATED ~~presented~~FINANCIAL asSTATEMENTS ~~net~~- ~~of amortization:~~UNAUDITED

~~On June 26, 2015, the Company~~SEPTEMBER ~~purchased the rights to the domain “CLOUDCOMMERCE.COM”, from a private party at a purchase price of $20,000, plus transaction costs of $202. During the six months ended June~~ 30, 2024~~, the Company decided not to renew its rights to the domain name and recorded an impairment to intangible assets in the amount of $20,202.~~

~~June~~NOTE 2. ~~30,~~SUMMARY ~~2024~~OF SIGNIFICANT ACCOUNTING POLICIES (continued)

~~AiAdvertising~~Impairment of ~~Total Domain name~~ Long-Lived ~~- Total $ - $ -~~Assets

~~December~~The Company 31reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, ~~2023~~management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value. Fair value is determined by an evaluation of available price information at which assets could be bought or sold, including quoted market prices, if available, or the present value of the estimated future cash flows based on reasonable and supportable assumptions, See Note 4.

	AiAdvertising		Total
Domain name		20,202		20,202
Total	$	20,202	$	20,202

Indefinite Lived Intangibles

8The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions AiAdvertising believes to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

~~Concentrations~~The Company tests for indefinite lived intangibles and goodwill impairment in the fourth quarter of ~~Business~~each year and ~~Credit~~whenever ~~Risk~~events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable.

The ~~Company operates in a~~ ~~single~~impairment ~~industry~~test ~~segment.~~conducted ~~The~~by ~~Company~~the ~~markets its services to companies and individuals in many industries and geographic locations. The~~ Company’s ~~operations~~includes ~~are~~a ~~subject~~two-step approach to ~~rapid~~determine ~~technological~~whether ~~advancement~~it ~~and~~is ~~intense~~more ~~competition.~~likely ~~Accounts~~than ~~receivable~~not ~~represent~~that ~~financial~~impairment ~~instruments with potential credit risk~~exists. ~~The~~If ~~Company~~it ~~typically~~is ~~offers~~determined, ~~its~~after ~~customers~~step ~~credit terms. The Company makes periodic evaluations of the credit worthiness of its enterprise customers and other than obtaining deposits pursuant to its policies~~one, that it ~~generally~~is ~~does~~ not ~~require~~ ~~collateral.~~more Inlikely ~~the~~than ~~event of nonpayment~~not, ~~the~~that ~~Company~~impairment ~~has the ability to terminate services. As of June 30~~exists, ~~2024,~~then ~~the~~no ~~Company~~further ~~held cash~~analysis ~~and cash equivalents in the amount of $465,957 which was held in the operating bank accounts. Of this amount, $87,984~~ is ~~held in~~ ~~amounts exceeding the FDIC insured limit of $250,000 for each account~~conducted. ~~For~~The ~~further~~steps ~~discussion~~are onas ~~Concentrations see footnote 9.~~follows:

~~Stock-~~1. Based ~~Compensation~~on the totality of qualitative factors, determine whether the carrying amount of the intangible asset may not be recoverable. Qualitative factors and key assumptions reviewed include the following:

~~The~~● ~~Company~~Increases ~~addressed~~in ~~the accounting~~costs, ~~for~~such ~~share-based~~as ~~payment~~labor, ~~transactions~~materials inor ~~which~~other ancosts ~~enterprise~~that ~~receives~~could ~~employee~~negatively ~~services~~affect infuture ~~exchange~~cash ~~for~~flows. ~~either~~The ~~equity~~Company ~~instruments of~~assumed ~~the enterprise or liabilities~~ that ~~are~~costs ~~based~~associated onwith ~~the~~labor, ~~fair~~materials, ~~value~~and ofother ~~the~~costs ~~enterprise’s~~should ~~equity~~be ~~instruments~~consistent orwith ~~that~~fair ~~may~~market belevels. ~~settled by~~If the ~~issuance~~costs ofwere ~~such~~materially ~~equity~~higher ~~instruments.~~than ~~The~~fair ~~transactions~~market ~~are~~levels, ~~accounted~~then ~~for~~such ~~using~~costs amay ~~fair-value-based~~adversely ~~method~~affect ~~and~~the ~~recognized~~future ascash ~~expenses in~~flows ~~our~~of ~~statement~~the ofCompany ~~operations~~or reporting units.

~~Stock-based~~● ~~compensation expense~~Financial ~~recognized~~performance, ~~during~~such ~~the~~as ~~period~~negative isor ~~based~~declining oncash ~~the~~flows, ~~value~~or ofreductions ~~the~~in ~~portion~~revenue ofmay ~~stock-based~~adversely ~~payment~~affect ~~awards~~recoverability ~~that~~of ~~is ultimately expected to vest. Stock-based compensation expense recognized in~~ the ~~consolidated~~recorded ~~statement~~value of ~~operations during~~ the ~~six~~intangible ~~months~~assets. ~~ended~~During ~~June~~our 30analysis, ~~2024, included compensation expense for~~ the ~~stock-based~~Company ~~payment~~assumes ~~awards~~that ~~granted~~revenues ~~prior~~should ~~to,~~remain ~~but~~relatively ~~not~~consistent ~~yet~~or ~~vested,~~show asgradual ofgrowth ~~June~~month-to-month ~~30,~~and ~~2024, based on the grant date fair value estimated~~quarter-to-quarter. ~~Stock-based~~If ~~compensation expense recognized in~~ the ~~consolidated~~Company ~~statement~~reports ofrevenue ~~operations for the six months ended June 30~~declines, ~~2024,~~instead isof ~~based~~increases ~~on awards ultimately expected to vest~~ or ~~has~~flat ~~been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised~~levels, ifthen ~~necessary,~~such incondition ~~subsequent~~may ~~periods~~adversely ifaffect ~~actual forfeitures differ from those estimates. The stock-based compensation expense recognized in~~ the ~~consolidated~~future ~~statements~~cash flows of ~~operations during~~ the ~~six~~Company ~~months~~or ~~ended~~reporting ~~June 30, 2024, and 2023 was $1,076,982 and $836,261, respectively~~units.

~~Basic~~● ~~and~~Legal, ~~Diluted~~regulatory, ~~Net~~contractual, ~~Income~~political, ~~(Loss)~~business ~~per~~or ~~Share Calculations~~other factors that could affect future cash flows. During our analysis, the Company assumes that the legal, regulatory, political or business conditions should remain consistent, without placing material pressure on the Company or any of its reporting units. If such conditions were to become materially different than what has been experienced historically, then such conditions may adversely affect the future cash flows of the Company or reporting units.

~~Income~~● ~~(Loss)~~Entity-specific ~~per~~events ~~Share~~such ~~dictates the~~as ~~calculation~~losses of ~~basic~~management, ~~earnings~~key ~~per~~personnel, ~~share~~or ~~and~~customers, ~~diluted~~may ~~earnings~~adversely ~~per~~affect ~~share.~~future ~~Basic~~cash ~~earnings~~flows. ~~per~~During ~~share~~our ~~are~~analysis, ~~computed~~the byCompany ~~dividing~~assumes ~~income~~that ~~available to~~members ~~common~~of ~~shareholders~~management, bykey ~~the~~personnel, ~~weighted-average~~and ~~number~~customers ofwill ~~common~~remain ~~shares~~consistent ~~available~~period-over-period. ~~Diluted~~If ~~earnings~~not ~~per~~effectively ~~share~~replaced, isthe ~~computed~~loss ~~similar~~of tomembers ~~basic earnings~~of ~~per~~management ~~share~~and ~~except~~key ~~that~~employees ~~the~~could ~~denominator~~adversely isaffect ~~increased~~operations, toculture, ~~include~~morale ~~the~~and ~~number~~overall success of ~~additional~~the ~~common~~company. ~~shares~~In ~~that~~addition, ~~would have been outstanding~~ if ~~the~~material ~~potential~~revenue ~~common~~from ~~shares~~key ~~had~~customers ~~been~~is ~~issued~~lost and ifnot ~~the additional common shares were dilutive. The shares for employee options~~replaced, ~~warrants and~~then ~~convertible~~future ~~notes~~cash ~~were~~flows ~~used~~will inbe ~~the~~adversely ~~calculation of the income per share~~affected.

For the six months ended June 30, 2024, the Company has excluded 934,900,000 shares of common stock underlying options, 18,025 Series B Preferred shares convertible into 450,625,000 shares of common stock, 14,425 Series C Preferred shares convertible into 144,250,000 shares of common stock, 86,021 Series D Preferred shares convertible into 215,052,500 shares of common stock, 10,000 Series E Preferred shares convertible into 20,000,000 shares of common stock, 2,597 Series G Preferred shares convertible into 136,684,211 shares of common stock, 3,165,584 Series I preferred shares convertible into 1,266,233,600 shares of common stock, and 162,703,869 shares of common stock underlying warrants, because their impact on the loss per share is anti-dilutive. During the three and six months ended June 30, 2024, the balance of the above-mentioned shares is excluded in the calculation for diluted earnings per share.8

~~For the six months ended June 30~~AiADVERTISING, ~~2023, the Company has excluded 609,087,214 shares of common stock underlying options, 18,025 Series B Preferred~~ shares convertible into 450,625,000 shares of common stock, 14,425 Series C Preferred shares convertible into 144,250,000 shares of common stock, 86,021 Series D Preferred shares convertible into 215,052,500 shares of common stock, 10,000 Series E Preferred shares convertible into 20,000,000 shares of common stock, 2,597 Series G Preferred shares convertible into 136,684,211 shares of common stock, 2,272,727 Series I preferred shares convertible into 909,090,800 shares of common stock, and 162,703,869 shares of common stock underlying warrants, because their impact on the loss per share is anti-dilutiveINC. ~~During~~ ~~the~~AND three and six months ended June 30, 2023, the Series I Preferred shares are included in the calculation for diluted earnings per share, resulting in 909,090,800 being added to the weighted average common and common equivalent shares outstanding. The balance of the above-mentioned shares are excluded in the calculation for diluted earnings per share.SUBSIDIARIES

~~Dilutive per share amounts~~NOTES ~~are~~TO ~~computed~~CONDENSED ~~using~~CONSOLIDATED ~~the~~FINANCIAL ~~weighted~~STATEMENTS -~~average~~ ~~number~~UNAUDITED SEPTEMBER ~~of common shares outstanding and potentially dilutive securities~~30, ~~using the treasury stock method if their effect would be dilutive.~~2024

~~Income~~NOTE 2. ~~Taxes~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

~~The~~● ~~Company~~Industry ~~uses~~or market considerations, such as competition, changes in the ~~asset and~~market, ~~liability~~changes ~~method~~in ofcustomer ~~accounting~~dependence ~~for~~on ~~income~~our ~~taxes~~service offerings, or obsolescence could adversely affect the Company or its reporting units. ~~Deferred~~AiAdvertising ~~tax~~understands ~~assets~~that ~~and~~the ~~liabilities~~markets the Company serves are ~~recognized~~constantly ~~for~~changing, requiring us to change with them. During our analysis, the ~~future~~Company ~~tax~~assumes ~~consequences attributable~~that towe ~~financial~~will ~~statements~~address ~~carrying~~new ~~amounts~~opportunities ofin ~~existing~~service ~~assets~~offerings and ~~liabilities~~industries ~~and~~served. ~~their~~If ~~respective~~AiAdvertising ~~tax~~does ~~bases~~not ~~and~~make ~~operating loss~~such changes, then AiAdvertising may experience declines in revenue and ~~tax~~cash ~~credit~~flow, ~~carry~~making it difficult to re-~~forwards~~capture market share. ~~The~~● ~~measurement~~Macroeconomic ofconditions ~~deferred~~such ~~tax~~as ~~assets~~deterioration ~~and~~in ~~liabilities~~general iseconomic ~~based~~conditions or limitations on ~~provisions~~accessing ofcapital ~~applicable~~could ~~tax~~adversely ~~law~~affect the Company. ~~The~~ ~~measurement~~During ofour ~~deferred~~analysis, ~~tax~~AiAdvertising ~~assets~~acknowledges isthat ~~reduced~~macroeconomic factors, ifsuch ~~necessary~~as the economy, bymay aaffect ~~valuation~~our ~~allowance~~business ~~based~~plan onbecause ~~the~~our ~~amount~~customers ofmay ~~tax~~reduce ~~benefits~~budgets ~~that,~~for ~~based on~~our ~~available~~services. ~~evidence~~If there are material worsening in economic conditions, ~~the~~which ~~Company~~lead ~~does~~to ~~not~~reductions ~~expect~~in ~~realize~~revenue then such conditions may adversely affect the Company.

92. Compare the carrying amount of the intangible asset to the fair value.

~~For~~3. If the ~~six~~carrying ~~months~~amount ~~ended June~~is ~~30,~~greater ~~2024,~~than ~~we used~~ the ~~federal~~fair ~~tax~~value, ~~rate~~then ofthe ~~21%~~carrying inamount ~~our~~is ~~determination~~reduced ofto ~~the~~reflect ~~deferred~~fair ~~tax assets and liabilities balances~~value.

	For the six months ended June 30, 2024
Current tax provision:
Federal
Taxable income	$	-
Total current tax provision	$	-
Deferred tax provision:
Loss carryforwards	$	6,712,219
Change in valuation allowance		(6,712,219	)
Total Deferred tax provision	$	-

Segment Reporting

~~Recently~~The Company ~~Adopted~~operates as one reportable segment under Accounting ~~Pronouncements~~Standards Codification “ASC” 280, Segment Reporting. The chief operating decision maker (“CODM”) regularly reviews the financial information of the Company at a consolidated level in deciding how to allocate resources and in assessing performance. The Company markets its services to companies and individuals in many industries and geographic locations.

~~The Company does not elect~~Concentrations ~~to delay complying with any new or revised accounting standards, but to apply all standards required~~ of ~~public~~Business ~~companies,~~and ~~according~~Credit ~~to those required application dates.~~Risk

~~Management~~The Company’s ~~reviewed~~operations ~~accounting~~are subject to rapid technological advancement and intense competition. Accounts receivable represent financial ~~pronouncements~~instruments ~~issued~~with ~~during~~potential ~~the~~credit ~~quarter~~risk. ~~ended~~The ~~June~~Company ~~30,~~typically ~~2024,~~offers its customers credit terms. The Company makes periodic evaluations of their credit worthiness of its enterprise customers and noother ~~pronouncements~~than ~~were~~obtaining ~~adopted~~deposits ~~during~~pursuant to its policies, it generally does not require collateral. In the ~~period~~event of nonpayment, the Company has the ability to terminate services, until such time, payment is received.

3The Company maintains cash with a commercial bank, which is insured by the Federal Deposit Insurance Corporation (“FDIC”). ~~REVENUE~~At various ~~RECOGNITION~~times, the Company has deposits in this financial institution in excess of the amount insured by the FDIC. The Company has not experienced any losses related to these balances and believes its credit risk to be minimal. As of September 30, 2024 and December 31, 2023, the Company did not have any bank account balances that exceeded federally insured limits by the FDIC. See Note 8 for concentration of the Company’s customers.

~~On January 1, 2018, the Company adopted ASU 2014~~Stock-~~09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”),~~Based using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The adoption of ASC 606 did not have a material impact on the Company’s Consolidated Financial Statements.Compensation

The Company ~~core~~addressed ~~principles~~the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of ~~revenue~~the enterprise or liabilities that are based on the fair value of the enterprise’s equity instruments ~~recognition~~or ~~under~~that ~~ASC~~may ~~606~~be ~~includes~~settled by the ~~following~~issuance ~~five~~of ~~criteria:~~such equity instruments. The transactions are accounted for using a fair-value-based method and recognized as expenses in our consolidated statements of operations.

1Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. ~~Identify~~Stock-based compensation expense recognized in the ~~contract~~condensed ~~with~~consolidated statements of operations during the ~~customer~~three and nine months ended September 30, 2024 and 2023, included compensation expense for the stock-based payment awards granted prior to, but not yet vested, as of September 30, 2024, based on the grant date fair value estimated. Stock-based compensation expense recognized in the condensed consolidated statements of operations for the nine months ended September 30, 2024, is based on awards ultimately expected. Stock-based compensation expense for options recognized in the consolidated statements expense during the three months ended September 30, 2024 and 2023 was $304,440 and $417,382, respectively. Stock-based compensation expense for options recognized in the consolidated statements of operations during the nine months ended September 30, 2024 and 2023, was $1,381,422 and $1,253,643, respectively.

Contract with our customers may be oral, written, or implied. A written and signed contract stating the terms and conditions is the preferred method and is consistent with most customers. The terms of a written contract may be contained within the body of an email, during which proposals are made and campaign plans are outlined, or it may be a stand-alone document signed by both parties. Contracts that are oral in nature are consummated in status and pitch meetings and may be later followed up with an email detailing the terms of the arrangement, along with a proposal document. No work is commenced without an understanding between the Company and our customers, that a valid contract exists.9

2AiADVERTISING, INC. ~~Identify~~AND ~~the performance obligations in the contract~~SUBSIDIARIES

~~Our sales and account management teams~~NOTES ~~define~~TO ~~the~~CONDENSED ~~scope~~CONSOLIDATED ofFINANCIAL ~~services~~STATEMENTS to be offered, to ensure all parties are in agreement and obligations are being delivered to the customer as promised. The performance obligation may not be fully identified in a mutually signed contract, but may be outlined in email correspondence, face-~~to-face~~ ~~meetings, additional proposals or scopes of work, or phone conversations.~~UNAUDITED

3.SEPTEMBER 30, ~~Determine the transaction price~~2024

~~Pricing is discussed and identified~~NOTE ~~by the operations team prior to submitting a proposal to the customer~~2. ~~Based~~SUMMARY onOF ~~the~~SIGNIFICANT ~~obligation~~ACCOUNTING ~~presented,~~POLICIES ~~third-party service pricing~~(continued) ~~is established, and time and labor are estimated, to determine the most accurate transaction pricing for our customer. Price is subject~~ ~~to change upon agreed parties, and could be fixed or variable, milestone focused or time and materials.~~

4.Basic and ~~Allocate~~Diluted ~~the~~Net ~~transaction~~Income ~~price~~(Loss) toper ~~the~~Share ~~performance obligations in the contract~~Calculations

IfBasic earnings aper ~~contract~~share ~~involves~~are ~~multiple~~computed ~~obligations,~~ by dividing income available to common shareholders by the ~~transaction~~weighted-average ~~pricing~~number of common shares available. Diluted earnings per share is ~~allocated~~computed ~~accordingly,~~similar ~~during~~to basic earnings per share except that the ~~performance~~denominator ~~obligation~~is ~~phase~~increased ~~(criteria~~to 2include ~~above)~~the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Shares for stock options and warrants and were used in the calculation of the income per share.

10The following potentially dilutive securities were not included in the calculation of diluted net loss per share attributable to common shareholders of the Company because their effect would be anti-dilutive for the periods presented:

5. Recognize revenue when (or as) we satisfy a performance obligation

	Three and Nine Months September 30, 2024				Three and Nine Months September 30, 2023
	Number of Preferred Shares		Common Stock Equivalents		Number of Preferred Shares		Common Stock Equivalents
Stock options		-		921,555,912		-		605,566,666
Warrants		-		162,703,869		-		162,703,869
Series B Preferred Stock		18,025		450,625,000		18,025		450,625,000
Series C Preferred Stock		14,425		144,250,000		14,425		144,250,000
Series D Preferred Stock		86,021		215,052,500		86,021		215,052,500
Series E Preferred Stock		10,000		20,000,000		10,000		20,000,000
Series G Preferred Stock		2,597		136,684,211		2,597		136,684,211
Series I Preferred Stock		2,272,727		909,090,800		2,272,727		909,090,800
Series I Preferred Stock (A)		892,857		357,142,800		-		-
Total				3,317,105,092				2,643,973,046

~~The~~(A) ~~Company~~These ~~uses~~shares ~~several~~have ~~means~~not tobeen ~~satisfy the~~authorized ~~performance~~as ~~obligations:~~of September 30, 2024, See Note 10.

a. Billable Hours – The Company employs a time tracking system where employees record their time by project. This method of satisfaction is used for time and material projects, change orders, website edits, revisions to designs, and any other project that is hours-based. The hours satisfy the performance obligation as the hours are incurred.Income Taxes

bThe Company uses the asset and liability method of accounting for income taxes. AdDeferred ~~Spend~~tax –assets Toand ~~satisfy~~liabilities adare ~~spend,~~recognized for the future ~~Company~~tax ~~generates~~consequences ~~analytical~~attributable ~~reports~~to ~~monthly~~financial orstatements ascarrying ~~required~~amounts toof ~~show~~existing ~~how~~assets ~~the~~and adliabilities ~~dollars~~and ~~were~~their ~~spent~~respective tax bases and ~~how~~operating ~~the~~loss ~~targeting~~and ~~resulted~~tax incredit ~~click~~carry-~~throughs~~forwards. The admeasurement ~~spend~~of ~~satisfies~~deferred ~~the~~tax ~~performance~~assets ~~obligation,~~and ~~regardless~~liabilities is based on provisions of ~~the~~applicable ~~outcome~~tax orlaw. ~~effectiveness~~The measurement of ~~the~~deferred ~~campaign.~~tax Inassets ~~addition~~is reduced, if necessary, by a valuation allowance based on the ~~Company~~amount of ~~utilizes~~tax ~~third~~benefits ~~party~~that, ~~invoices~~based ~~after~~on available evidence, the adCompany ~~dollars~~does ~~are~~not ~~spent~~expect realize. As of September 30, in2024 ~~order~~and toSeptember ~~satisfy~~30, 2023, the ~~obligation~~Company recorded a full tax valuation allowance.

c.Recent Accounting Milestones – If the contract requires milestones to be hit, then the Company satisfies the performance obligation when that milestone is completed and presented to the customer for review. As each phase of a project is complete, we consider it as a performance obligation being satisfied and transferred to the customer. At this point, the customer is invoiced the amount due based on the transaction pricing for that specific phase and/or we apply the customer deposit to recognize revenue.Guidance

d.In June ~~Monthly~~2016, ~~Retainer~~the Financial Accounting Standards Board “FASB” issued Accounting Standards Update “ASU” ASU 2016-13, Financial Instruments – IfCredit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments included in ASU 2016-13 require the ~~contract~~measurement isof aall ~~retainer~~expected credit losses for ~~work~~financial ~~performed~~assets held at the reporting date based on historical experience, current ~~then~~conditions, and reasonable and supportable forecasts. Although the ~~customer~~new isstandard, ~~paying~~known as the ~~Company~~current ~~for~~expected ~~its~~credit ~~expertise~~loss (“CECL”) model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and ~~accessibility~~loan commitments, ~~not~~and ~~for~~held-to-maturity (HTM) adebt ~~pre~~securities) are subject to the CECL model and will need to use forward-~~defined~~looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of ~~output~~expected credit losses. In ~~this case~~addition, the ~~obligation~~ASU isamends ~~satisfied~~the ataccounting ~~the~~for ~~end~~credit losses on available- for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the ~~period~~FASB issued ASU 2019-10, Financial ~~regardless~~Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. The Company adopted ASU 2016-13 on January 1, 2023, which did not have a material impact on the ~~amount~~Company’s financial position, results of ~~work~~operations ~~effort~~and ~~required~~liquidity.

Historically, the Company generates income from four main revenue streams: Platform, creative design, web development, and digital marketing. Each revenue stream is unique, and includes the following features:10

~~Platform~~AiADVERTISING, INC. AND SUBSIDIARIES

~~We provide a subscription-based,~~NOTES ~~end-to-end~~TO AdCONDENSED ~~Management~~CONSOLIDATED ~~Campaign~~FINANCIAL ~~Performance~~STATEMENTS Platform. We believe in harnessing the power of artificial intelligence (AI) and machine learning (ML) to eliminate waste and maximize return on digital ad spend. The platform empowers brands and agencies to easily target, predict, create, scale, and measure hyper-~~personalized~~ campaigns. We prove what works and what doesn’t, enabling our clients to make informed and strategic decisions impacting their bottom lines positively. We classify revenue as a percentage of the ad spend budget or as a monthly fixed fee for the platform license subscription. Contracts are generated to assure both the Company, and the client are committed to partnership, agree to the defined terms and conditions, and are typically for one year. The transaction price is usually a percentage of the media budget, which is subject to change on a case-by-case basis. The Company evaluates the fair value of the platform license obligation by using the expected cost-plus margin approach to determine the reasonableness of the transaction price. The Company recognizes revenue when performance obligations are met, such as the ad spend has run for percentage-based contracts. If the platform license fee is fixed, then the obligation is earned at the end of the period, regardless of how much media spend is performed.UNAUDITED

~~Creative~~SEPTEMBER 30, ~~Design~~2024

WeNOTE ~~provide branding and creative design services, which we believe, set apart our clients from their competitors and establish them in their specific markets~~2. ~~We believe~~ inSUMMARY ~~showcasing~~OF ~~our~~SIGNIFICANT ~~clients’~~ACCOUNTING ~~brands~~POLICIES uniquely and creatively to infuse the public with curiosity to learn more. We classify revenue as creative design that includes branding, photography, copyrighting, printing, signs and interior design. Contracts are generated to assure both the Company, and the client are committed to partnership and both agree to the defined terms and conditions and are typically less than one year. The Company recognizes revenue when performance obligations are met, usually when creative design services obligations are complete, when the hours are recorded, designs are presented, website themes are complete, or any other criteria as mutually agreed.(continued)

~~Web~~New Accounting ~~Development~~Pronouncements Not Yet Adopted

WeIn November ~~develop~~2023, ~~websites~~the ~~that attract~~FASB ~~high~~issued ~~levels~~“ASU” of2023-07, ~~traffic~~Segment ~~for~~Reporting ~~our~~(Topic ~~clients.~~280): WeImprovements ~~offer~~to ~~our~~Reportable ~~clients~~Segment ~~the~~Disclosures, which ~~expertise~~modifies tothe ~~manage~~disclosure and ~~protect~~presentation ~~their~~requirements ~~website,~~of ~~and~~reportable segments. The amendments in the ~~agility~~update require the disclosure toof ~~adjust~~significant ~~their~~segment ~~online~~expenses ~~marketing~~that ~~strategy~~are asregularly ~~their~~provided ~~business~~to ~~expands.~~the WeCODM ~~classify~~and ~~revenue~~included aswithin ~~web~~each ~~development~~reported ~~that~~measure ~~includes~~of ~~website~~segment ~~coding,~~profit and ~~website~~loss. ~~patch~~The ~~installs,~~amendments ~~ongoing~~also ~~development~~require ~~support~~disclosure ~~and~~of ~~fixing~~all ~~inoperable~~other ~~sites.~~segment ~~Contracts~~items ~~are~~by ~~generated~~reportable tosegment ~~assure~~and ~~both~~a ~~the~~description ~~Company,~~of ~~and~~its composition. Additionally, the ~~client~~amendments ~~are~~require ~~committed~~disclosure toof the ~~partnership~~title and ~~both~~position ~~agree~~of to the ~~defined~~CODM ~~terms~~ and ~~conditions.~~an ~~Although~~explanation ~~most~~of ~~projects~~how ~~are~~the ~~long-term~~CODM uses the reported measure(~~6-8 months~~s) of insegment ~~scope,~~profit weor doloss ~~welcome~~in ~~short-term~~assessing ~~projects~~segment ~~which~~performance ~~are~~and ~~invoiced~~deciding ashow ~~the~~to ~~work~~allocate resources. This update is ~~completed~~effective atfor aannual periods ~~specified~~beginning ~~hourly~~after ~~rate.~~December ~~The~~15, ~~Company records~~2023, ~~web~~and ~~development~~interim ~~revenue~~periods aswithin ~~earned~~fiscal years beginning after December 15, ~~when~~2024. ~~the~~Early ~~developer~~adoption is ~~hours~~permitted. ~~are~~The ~~recorded~~Company ~~(if~~is ~~time~~currently ~~and~~evaluating ~~materials~~the ~~arrangements)~~impact orthat ~~when~~this guidance will have on the ~~milestones are~~presentation ~~achieved~~of ~~(if~~its aConsolidated ~~milestone~~Financial Statements ~~arrangement)~~and accompanying notes.

11In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2025. The Company is currently evaluating the impact that this guidance will have on the presentation of its Consolidated Financial Statements and accompanying notes.

~~Digital~~In November ~~Marketing~~2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which aims to improve the disclosures about a public business entity’s expense by requiring more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and early adoption is permitted. The Company is currently evaluating the impact from the adoption of this ASU on the Company’s Consolidated Financial Statements.

~~We have a reputation for~~NOTE ~~providing digital marketing services that get results~~3. WeREVENUE classify revenue as digital marketing, including ad spend and digital ad support. Billable hours and advertising spending are estimated based on client-specific needs and subject to change with client concurrence. Revenue is recognized when ads are run on one of the third-party platforms or when the hours are recorded by the digital marketing specialist if the obligation relates to support or services.RECOGNITION

~~Included in creative design~~Revenues ~~and digital marketing revenues~~ are ~~costs~~recognized ~~that~~when ~~are~~control ~~reimbursed~~of bythe ~~our~~promised ~~clients,~~goods ~~including~~or ~~third-party~~ services, ~~such~~is astransferred ~~photographers~~to ~~and stylists,~~our ~~supplies~~customers, ~~and~~in ~~the~~an ~~largest~~amount ~~component, digital advertising. We have determined, based on our review,~~ that reflects the ~~amounts classified~~consideration asthe ~~reimbursable~~Company ~~costs~~expects ~~should~~to be ~~recorded~~entitled asto ~~gross~~in ~~(principal),~~exchange ~~due~~for tothose ~~the~~goods ~~following~~or ~~factors:~~services.

- The core ~~Company~~principles isof ~~the~~revenue ~~primary~~recognition ~~obligor~~under inASC 606 includes the ~~arrangement;~~following five criteria:

-1. WeIdentify ~~have~~the ~~latitude~~contract inwith ~~establishing~~the ~~price;~~customer

Contract with our customers may be oral, written, or implied. A written and signed contract stating the terms and conditions is the preferred method and is consistent with most customers. The terms of a written contract may be contained within the body of an email, during which proposals are made, and campaign plans are outlined, or it may be a stand-alone Wedocument ~~have~~signed ~~discretion~~by both parties. Contracts that are oral in ~~supplier~~nature ~~selection;~~are consummated in status and pitch meetings and may be later followed up with an email detailing the terms of the arrangement, along with a proposal document. No work is commenced without an understanding between the Company and our customers, that a valid contract exists.

The Company has credit risk included in creative design and digital marketing revenues are costs that are reimbursed by our clients, including third party services, such as photographers and stylists, supplies, and the largest component, digital advertising2. WeIdentify ~~have determined, based on our review, that~~ the ~~amounts~~performance ~~classified~~obligations asin ~~reimbursable costs should be recorded as gross (principal), due to~~ the ~~following factors:~~contract

-Our sales ~~The~~and ~~Company~~account ismanagement teams define the ~~primary~~scope ~~obligor~~of services to be offered, to ensure all parties are in agreement and obligations are being delivered to the ~~arrangement;~~customer as promised. The performance obligation may not be fully identified in a mutually signed contract, but may be outlined in email correspondence, face-to-face meetings, additional proposals or scopes of work, or phone conversations.

~~- We have latitude in establishing price;~~11

-AiADVERTISING, INC. WeAND ~~have discretion in supplier selection; and~~SUBSIDIARIES

-NOTES TO ~~The~~CONDENSED ~~Company~~CONSOLIDATED ~~has~~FINANCIAL ~~credit~~STATEMENTS ~~risk~~- UNAUDITED

~~For the six months ended~~SEPTEMBER ~~June~~ 30, 2024~~, and 2023 (unaudited), revenue was disaggregated into the four categories as follows:~~

	Six months ended June 30, 2024 (unaudited)						Six months ended June 30, 2023 (unaudited)
	Third Parties		Related Parties		Total		Third Parties		Related Parties		Total
Design		877,055		-		877,055		550,933		-		550,933
Development		-		-		-		28,000		-		28,000
Digital Marketing		3,027,648		-		3,027,648		2,922,620		-		2,922,620
Platform License		422,349		-		422,349		267,240		-		267,240
Total	$	4,327,052	$	-	$	4,327,052	$	3,768,793	$	-	$	3,768,793

NOTE 3. REVENUE RECOGNITION (continued)

43. ~~LIQUIDITY~~Determine ~~AND~~the ~~OPERATIONS~~transaction price

~~The~~Pricing is ~~Company~~discussed ~~had~~and aidentified ~~net~~by ~~loss of~~the ~~$3,323,834~~operations ~~for~~team prior to submitting a proposal to the ~~six~~customer. ~~months~~Based ~~ended~~on ~~June~~the 30obligation presented, third-party ~~2024~~service pricing is established, aand ~~net~~time ~~loss~~and oflabor $2are estimated,~~773,511~~ ~~for~~to determine the ~~six~~most ~~months~~accurate ~~ended~~transaction ~~June~~pricing ~~30,~~for our ~~2023,~~customer. ~~and~~Price ~~net~~is ~~cash~~subject ~~used in~~to ~~operating~~change ~~activities~~upon ofagreed ~~$(2~~parties,~~144,941)~~ and ~~$(3,245,612),~~could inbe ~~the~~fixed ~~same~~or ~~periods~~variable, ~~respectively~~milestone focused or time and materials.

~~While~~4. ~~the~~Allocate ~~Company expects that its capital needs in~~ the ~~foreseeable~~transaction ~~future~~price ~~may~~to ~~be met by cash-on-hand and projected positive cash-flow, there is no assurance that~~ the ~~Company~~performance ~~will~~obligations ~~be able to generate enough positive cash flow to finance its growth and business operations~~ in ~~which event,~~ the ~~Company may need to seek outside sources of capital. There can be no assurance that such capital will be available on terms that are favorable to the Company or at all.~~contract

5.If a ~~INTANGIBLE~~contract ~~ASSETS~~involves multiple obligations, the transaction pricing is allocated accordingly, during the performance obligation phase (criteria 2 above).

~~Domain~~5. ~~Name~~Recognize revenue when (or as) the Company satisfies a performance obligation

~~On June 26, 2015, the Company~~The ~~purchased the rights to the domain “CLOUDCOMMERCE.COM”, from a private party at a purchase price of $20,000, plus transaction costs of $202. We use the domain as the main landing page for the~~ Company. ~~The~~uses ~~total~~several ~~recorded~~means ~~cost~~to ofsatisfy ~~this domain of $20,202 has been included in other assets on~~ the ~~balance~~performance ~~sheet.~~obligations:

~~During~~a. ~~the~~Billable ~~six~~Hours ~~months~~– ~~ended June~~The ~~30,~~Company ~~2024,~~employs ~~the~~a ~~Company~~time ~~decided~~tracking ~~not~~system towhere ~~renew~~employees ~~its~~record ~~rights~~their totime ~~the~~by ~~domain~~project. ~~name~~This method of satisfaction is used for time and ~~recorded~~material anprojects, ~~impairment~~change orders, website edits, revisions to ~~intangible~~designs, ~~assets~~and inany other project that is hours-based. The hours satisfy the ~~amount of~~performance ~~$20,202~~obligation as the hours are incurred.

12b. Ad Spend – To satisfy ad spend, the Company generates analytical reports monthly or as required to show how the ad dollars were spent and how the targeting resulted in click-throughs. The ad spend satisfies the performance obligation, regardless of the outcome or effectiveness of the campaign. In addition, the Company utilizes third party invoices after the ad dollars are spent, in order to satisfy the obligation.

~~The~~c. Milestones – If the contract requires milestones to be hit, then the Company’s ~~intangible~~satisfies ~~assets consist~~the performance obligation when that milestone is completed and presented to the customer for review. As each phase of a project is complete, the ~~following:~~Company considers it as a performance obligation being satisfied and transferred to the customer. At this point, the customer is invoiced the amount due based on the transaction pricing for that specific phase and/or the Company applies the customer deposit to recognize revenue.

			June 30, 2024						December 31, 2023
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Domain name		-		-		-		20,202		-		20,202
Total	$	-	$	-	$	-	$	20,202	$	-	$	20,202

Monthly Retainer – If the contract is a retainer for work performed, then the customer is paying the Company for its expertise and accessibility, not for a pre-defined amount of output. In this case, the obligation is satisfied at the end of the period, regardless of the amount of work effort required.

~~Total~~Historically, the ~~amortization~~Company ~~expense charged~~generates toincome ~~operations~~from ~~for~~four ~~the~~main ~~six~~revenue ~~months~~streams: ~~ended~~Platform, ~~June~~creative 30design, ~~2024~~web development, and ~~2023~~digital ~~was $0~~marketing. Each revenue stream is unique, and includes the following features:

~~6. CAPITAL STOCK~~Platform

AtAiAdvertising provides ~~June~~a 30subscription-based, ~~2024~~end-to-end ~~and~~Ad ~~December 31,~~Management ~~2023,~~Campaign ~~the~~Performance ~~Company’s~~Platform. ~~authorized~~AiAdvertising ~~stock~~believes ~~consists~~in harnessing the power of ~~10,000,000,000~~artificial intelligence (AI) and ~~2,000,000,000~~machine ~~shares~~learning of(ML) ~~common~~to ~~stock,~~eliminate ~~respectively,~~waste ~~par value~~and $0maximize return on digital ad spend.~~001~~ ~~per~~The ~~share,~~platform empowers brands and ~~5,000,000~~agencies ~~shares~~to ofeasily ~~preferred~~target, ~~stock~~predict, ~~par~~create, ~~value~~scale, ofand ~~$0.001~~measure ~~per~~hyper-personalized ~~share~~campaigns. ~~The~~AiAdvertising ~~rights,~~approves ~~preferences~~what works and what doesn’t, enabling our clients to make informed and ~~privileges~~strategic decisions impacting their bottom lines positively. The Company classifies revenue as a percentage of the ~~holders~~ad ofspend budget or as a monthly fixed fee for the ~~preferred~~platform ~~stock~~license ~~will~~subscription. beContracts are ~~determined~~generated byto assure both the ~~Board~~Company, ofand ~~Directors~~the ~~prior~~client are committed to ~~issuance~~partnership, ofagree ~~such~~to ~~shares~~the defined terms and conditions, and are typically for one year. The ~~conversion~~transaction price is usually a percentage of ~~certain~~ ~~outstanding~~the ~~preferred~~media ~~stock~~budget, ~~could~~which ~~have~~is asubject ~~significant~~to ~~impact~~change on ~~our~~a ~~common stockholders~~case-by-case basis. AsThe Company evaluates the fair value of the ~~date~~platform license obligation by using the expected cost-plus margin approach to determine the reasonableness of ~~this~~the ~~report~~transaction price. The Company recognizes revenue when performance obligations are met, such as the ~~Board~~ad spend has ~~designated~~run ~~Series~~for A,percentage-based ~~Series~~contracts. B,If ~~Series~~the C,platform ~~Series~~license D,fee ~~Series~~is Efixed, ~~Series~~then F,the ~~Series~~obligation G,is ~~Series~~earned H,at ~~Series~~the I,end ~~Series~~of Jthe period, regardless ~~and~~of ~~Series~~how Kmuch ~~Preferred Stock~~media spend is performed.

~~Series A Preferred~~12

~~The Company has designated 10~~AiADVERTISING,~~000 shares of its preferred stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into 10,000 shares~~ ~~of the Company’s common stock~~INC. ~~The~~AND holders of outstanding shares of Series A Preferred Stock are entitled to receive dividends, payable quarterly, out of any assets of the Company legally available therefore, at the rate of $8 per share annually, payable in preference and priority to any payment of any dividend on the common stock. As of June 30, 2024, and December 31, 2023, the Company had zero shares of Series A Preferred Stock outstanding. As of June 30, 2024, and December 31, 2023, the balance owed on the Series A Preferred stock dividend was zero.SUBSIDIARIES

~~Series~~NOTES TO BCONDENSED ~~Preferred~~CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~The Company has designated~~SEPTEMBER 25,000 shares of its preferred stock as Series B Preferred Stock. Each share of Series B Preferred Stock has a stated value of $100. The Series B Preferred Stock is convertible into shares of the Company’s common stock in amount determined by dividing the stated value by a conversion price of $0.004 per share. The Series B Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series B Preferred Stock. As of June 30, 2024~~, and December 31, 2023, the Company has 18,025 shares of Series B Preferred Stock outstanding.~~

~~Series~~NOTE 3. CREVENUE ~~Preferred~~RECOGNITION (continued)

~~The Company has designated~~Creative 25,000 shares of its preferred stock as Series C Preferred Stock. Each share of Series C Preferred Stock has a stated value of $100. The Series C Preferred Stock is convertible into shares of the Company’s common stock in the amount determined by dividing the stated value by a conversion price of $0.01 per share. The Series C Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series C Preferred Stock. As of June 30, 2024, and December 31, 2023, the Company has 14,425 shares of Series C Preferred Stock outstanding.Design

~~Series~~The Company Dprovides ~~Preferred~~branding and creative design services, which the Company believes, set apart our clients from their competitors and establish them in their specific markets. The Company believes in showcasing our clients’ brands uniquely and creatively to infuse the public with curiosity to learn more. The Company classifies revenue as creative design that includes branding, photography, copyrighting, printing, signs and interior design. Contracts are generated to assure both the Company, and the client are committed to partnership and other agree to the defined terms and conditions and are typically less than one year. The Company recognizes revenue when performance obligations are met, usually when creative design services obligations are complete, when the hours are recorded, designs are presented, website themes are complete, or any other criteria as mutually agreed.

~~The Company has designated~~Web 90,000 shares of its preferred stock as Series D Preferred Stock. Each share of Series D Preferred Stock has a stated value of $100. The Series D Preferred Stock is convertible into common stock at a ratio of 2,500 shares of common stock per share of preferred stock, and pays a quarterly dividend, calculated as (1/90,000) x (5% of the Adjusted Gross Revenue) of the Company’s subsidiary Parscale Digital. Adjusted Gross Revenue means the top line gross revenue of Parscale Digital, as calculated under GAAP (generally accepted accounting principles) less any reselling revenue attributed to third party advertising products or service, such as, but not limited to, search engine keyword campaign fees, social media campaign fees, radio or television advertising fees, and the like. The Series D Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series D Preferred Stock. As of June 30, 2024, and December 31, 2023, the Company had 86,021 shares of Series D Preferred Stock outstanding. During the three months ended June 30, 2024, and 2023, the Company paid dividends of $0 to the holders of Series D Preferred stock. As of June 30, 2024, and December 31, 2023, the balance owed on the Series D Preferred stock dividend was zero.Development

13The Company develops websites that attract high levels of traffic for our clients. The Company offers our clients the expertise to manage and protect their website, and the agility to adjust their online marketing strategy as their business expands. The Company classifies revenue as web development that includes website coding, website patch installs, ongoing development support and fixing inoperable sites. Contracts are generated to assure both the Company, and the client are committed to the partnership and both agree to the defined terms and conditions. Although most projects are long-term (6-8 months) in scope, the Company welcomes short-term projects which are invoiced as the work is completed at a specified hourly rate. The Company records web development revenue as earned, when the developer hours are recorded (if time and materials arrangements) or when the milestones are achieved (if a milestone arrangement).

~~Series E Preferred~~Digital Marketing

The Company’s ~~has~~reputations ~~designated 10,000~~for ~~shares~~providing ofdigital ~~its~~marketing ~~preferred~~services ~~stock~~that asget ~~Series E Preferred Stock~~results. ~~Each~~AiAdvertising ~~share~~classifies ofrevenue ~~Series~~as Edigital ~~Preferred~~marketing, including ~~Stock~~ad ~~has~~spend aand ~~stated~~digital ~~value~~ad ~~of $100~~support. ~~The Series~~Billable Ehours ~~Preferred~~and ~~Stock~~advertising isspending ~~convertible~~are ~~into~~estimated ~~shares~~based ofon ~~the~~client-specific ~~Company’s~~needs ~~common~~and ~~stock in an amount determined by dividing the stated~~subject ~~value~~to bychange awith ~~conversion~~client ~~price of $0~~concurrence.05 ~~per~~Revenue ~~share.~~is ~~The~~recognized ~~Series~~when Eads ~~Preferred~~are ~~Stock~~run ~~does~~on ~~not~~one ~~have~~of ~~voting~~the ~~rights~~third-party ~~except~~platforms asor ~~required~~when ~~by law and with respect to certain protective provisions set forth in~~ the ~~Certificate~~hours ofare ~~Designation of Series E Preferred Stock. As of June 30,~~recorded ~~2024,~~by ~~and December 31, 2023,~~ the ~~Company~~digital ~~had~~marketing ~~10,000~~specialist ~~shares~~if ofthe ~~Series~~obligation Erelates ~~Preferred~~to ~~Stock~~support ~~outstanding~~or services.

~~Series~~Included in Fcreative ~~Preferred~~design and digital marketing revenues are costs that are reimbursed by our clients, including third-party services, such as photographers and stylists, supplies, and the largest component, digital advertising. The Company has determined, based on our review, that the amounts classified as reimbursable costs should be recorded as gross (principal), due to the following factors:

- The Company ~~has designated 800,000 shares of its preferred stock as Series F Preferred Stock. Each share of Series F Preferred Stock has a stated value of $25. The Series F Preferred Stock~~ is ~~not convertible into common stock. The holders of outstanding shares of Series F Preferred Stock are entitled to receive dividends, at~~ the ~~annual~~primary ~~rate~~obligor ~~of 10%, payable monthly, payable~~ in ~~preference and priority to any payment of any dividend on~~ the Company’s common stock. The Series F Preferred Stock does not have voting rights, except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation. To the extent it may lawfully do so, the Company may, in its sole discretion, after the first anniversary of the original issuance date of the Series F Preferred Stock, redeem any or all of the then outstanding shares of Series F Preferred Stock at a redemption price of $25 per share plus any accrued but unpaid dividends. The Series F Preferred Stock was offered in connection with the Company’s offering under Regulation A under the Securities Act of 1933, as amended. As of June 30, 2024, and December 31, 2023, the Company had zero shares of Series F Preferred Stock outstanding, and the balance on stock dividend was zero.arrangement;

~~Series~~- GThe ~~Preferred~~Company has the latitude in establishing price;

On- ~~February~~The ~~6, 2020, the~~ Company ~~designated 2,600 shares of its preferred stock as Series G Preferred Stock. Each share of Series G Preferred Stock~~ has adiscretion ~~stated value of $100. The Series G Preferred Stock is convertible into shares of the Company’s common stock~~ in ansupplier ~~amount~~selection; ~~determined by dividing the stated value by a conversion price of $0.0019 per share. The Series G Preferred Stock does not have voting rights except as required by law~~ and with respect to certain protective provisions set forth in the Certificate of Designation of Series G Preferred Stock. As of June 30, 2024, and December 31, 2023, the Company had 2,597 shares of Series G Preferred Stock outstanding.

~~Series H Preferred~~13

~~On March 18~~AiADVERTISING, ~~2021, the Company~~ ~~issued 1,000 shares of its Series H Preferred Stock to the Chief Executive Officer of the Company, Andrew Van Noy~~INC. ~~The~~AND Series H Preferred Stock is not convertible into shares of the Company’s common stock and entitles the holder to 51% of the voting power of the Company’s shareholders, as set forth in the Certificate of Designation. The 1,000 shares of Series H Preferred stock provided for automatic redemption by the Company at the par value of $0.001 per share on the sooner of: 1) sixty days (60) from the effective date of the Certificate of Designation, 2) on the date Andrew Van Noy ceases to serve as an officer, director or consultant of the Company, or 3) on the date that the Company’s shares of common stock first trade on any national securities exchange. On May 18, 2021, the Company redeemed all shares of Series H Preferred stock.SUBSIDIARIES

~~On September 29, 2021, the~~NOTES ~~Company~~TO ~~filed~~CONDENSED aCONSOLIDATED ~~certificate~~FINANCIAL ofSTATEMENTS ~~withdrawal~~- with the Secretary of State of Nevada, to withdraw the Company’s existing certificate of designation of Series H Preferred Stock, filed a certificate of designation for a new series of Series H Preferred Stock with the Secretary of State of Nevada, and issued 1,000 shares of Series H Preferred Stock to Andrew Van Noy, the Company’s chief executive officer, for services rendered. As of June 30, 2024, and December 31, 2023, the Company had zero shares of Series H Preferred stock outstanding.UNAUDITED

~~Series~~SEPTEMBER 30, ~~I Preferred~~2024

~~On April 10, 2023, the Company~~NOTE ~~designated~~ 3~~,000,000 shares of its preferred stock as Series I Preferred Stock~~. ~~Each~~REVENUE ~~share~~RECOGNITION of Series I Preferred Stock has a stated value of $0.001. The Series I Preferred Stock is convertible into shares of the Company’s common stock at the option of the shareholder, at any time and from time to time, into four hundred (~~400~~continued) fully-paid and non-assessable shares of Common stock. The Series I Preferred Stock has voting rights equal to 400 common votes per Series I share on all matters upon which the holders of Common stock of the Company are entitled to vote, except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series I Preferred Stock.

~~On April 11, 2023, Hexagon~~For ~~Partners, Ltd. purchased 2,272,727 shares of Series I Preferred Stock at a purchase price of $2.20 per share. The Company also granted~~ the ~~Purchaser~~three aand ~~six-month~~nine ~~option~~months ~~(the~~ended ~~“Hexagon~~September ~~Purchase Agreement”) from the date of the initial closing to purchase (i) up to 333~~30,~~333~~ ~~additional shares of Series I Preferred Stock for a purchase price of $6.00 per share~~2024, and 2023 (iiunaudited) ~~up to 312~~,~~500~~ ~~shares~~revenue ofwas ~~Series I~~disaggregated ~~Preferred Stock for a purchase price of $7.20 per share. For so long as at least 50% of the Series I Preferred Stock purchased have not been redeemed by the Company or converted~~ into ~~common stock of~~ the ~~Company,~~four ~~Hexagon~~categories ~~will~~as have the right to designate two directors to the Company’s Board of Directors (the “Board”), and the Company may not increase the size of the Board above six directors without Hexagon’s prior written consent.follows:

	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Creative design	$	438,874		508,930	$	1,315,929	$	1,059,863
Development		-		-		-		28,000
Digital marketing		1,589,521		1,462,298		4,617,168		4,384,918
Platform license fees		208,504		180,308		630,853		385,548
Total	$	2,236,899	$	2,089,536	$	6,563,951	$	5,858,329

~~On January 29, 2024, the~~NOTE ~~Company and Hexagon Partners amended the terms of the Hexagon Purchase Agreement (the “Amendment”)~~4. ~~The~~INTANGIBLE Amendment provides for a ten-month option from the initial closing of the Purchase Agreement, to purchase (i) a second tranche consisting of up to 892,857 additional shares of Preferred Stock, at a price equal to $2.80 per share (the “Tranche B Option”), and (ii) a third tranche consisting of up to 168,269 additional shares of Preferred Stock, at a price equal to $10.40 per share. On January 30, 2024, the Purchaser exercised the Tranche B Option and the Company sold to the Purchaser 892,857 shares of Series I Preferred Stock at a price of $2.80 per share for gross proceeds of $2,500,000. The Company did not have a sufficient number of shares of Series I Preferred Stock authorized at the time the 892,857 shares were sold, and the amount of $2,500,000 has been recorded as Preferred Stock Payable on the Company’s balance sheet at June 30, 2024. See note 11.ASSETS

~~As of June 30, 2024, and December~~Domain ~~31, 2023, the Company had 2,272,727 shares of Series I Preferred Stock outstanding.~~Name

~~Series~~In June J2015, ~~Junior~~the ~~Participating~~Company ~~Preferred~~purchased the rights to the domain “CLOUDCOMMERCE.COM”, for $20,202. The Company used the domain as the main landing page for the Company.

~~On June 7, 2023, the Company~~During ~~designated 700,000 shares of its preferred stock as Series J Junior Participating Preferred Stock. Each share of Series J Preferred Stock has a stated value of $0.001. Pursuant to~~ the ~~Rights~~nine ~~Agreement,~~months ~~the~~ended ~~Board~~September ~~declared a dividend distribution of one preferred share purchase right (a “Right”) for each outstanding share of common stock~~30, ~~held by the shareholders of the Company at the close of business on June 7~~2024, ~~2023 (~~the ~~“Record Date”). Holders of the~~ Company’s ~~warrants~~did ~~and~~not ~~certain~~renew of its ~~existing~~rights ~~preferred stock (including the Series I Preferred stock issued pursuant~~ to the ~~Purchase~~domain ~~Agreement)~~name asand ofrecorded ~~the~~an ~~Record~~impairment ~~Date~~loss ~~were also issued one Right~~ for ~~each share~~ ofits ~~common~~intangible ~~stock~~asset ~~that~~for ~~such holders would be entitled to receive upon full exercise or conversion of their warrants or existing preferred stock~~$20, ~~as applicable~~202. ~~Each~~This ~~Right~~was ~~will entitle~~ the ~~holder~~only toimpairment ~~purchase~~loss ~~one~~for ~~ten-thousandth of a share of Series J Junior Participating Preferred Stock, of~~ the ~~Company~~periods ~~(the “Series J Preferred Shares”) at the purchase price set forth in the Rights Agreement~~presented. If issued, holders of the Series J Preferred Stock shall be entitled to receive 10,000 times the value of all declared cash and non-cash dividends paid to any and all junior classes of capital stock. The Series J Preferred Stock has voting rights equal to 10,000 votes on all matters upon which the holders of Common stock of the Company are entitled to vote, except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series J Preferred Stock. As of June 30, 2024, and December 31, 2023, the Company had zero shares of Series J Preferred Stock outstanding.

~~Series~~The Company’s Kintangible ~~Preferred~~asset consists of the following:

On March 21, 2024, the Company designated 1,000 shares of its preferred stock as Series K Preferred Stock. The Series K Preferred Stock is not convertible into shares of the Company’s common stock and entitles the holder to 51% of the voting power of the Company’s shareholders, as set forth in the Certificate of Designation. As of March 31, 2024, the Company had 1,000 shares of Series K Preferred Stock outstanding and held by Gerard Hug, the Chief Executive Officer of the Company. The 1,000 shares of Series K Preferred stock provided for automatic redemption by the Company at the par value of $0.001 per share on the sooner of: 1) sixty days (60) from the effective date of the Certificate of Designation, 2) on the date Gerard Hug ceases to serve as an officer, director or consultant of the Company, or 3) on the date that the Company’s shares of common stock first trade on any national securities exchange. For the quarter ended March 31, 2024, the Company estimated the value of the Series K Preferred shares to be $477,000, which was included in SG&A expenses on the Income Statement and in cash flows from operating activities on the statement of cash flows.

			September 30, 2024						December 31, 2023
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Domain name		-		-		-	$	20,202	$	-	$	20,202
Total	$	-	$	-	$	-	$	20,202	$	-	$	20,202

~~On May 20, 2024, the Company~~NOTE ~~redeemed 1,000 shares of its Series K Preferred stock at its par value of $0~~5.~~001~~ ~~per~~CAPITAL ~~share. As of June 30, 2024, there were 0 shares of Series K Preferred Stock outstanding. See note 11.~~STOCK

~~Common~~As of September 30, 2024 and December 31, 2023, the Company’s authorized stock consists of 10,000,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value of $0.001 per share. The rights, preferences, and privileges of the holders of the preferred stock will be determined by the Board of Directors prior to the issuance of such shares. The conversion of certain outstanding preferred stock could have a significant impact on the Company’s common stockholders. As of the date of this report, the Board has designated Series A, Series B, Series C, Series D, Series E, Series F, Series G, Series H, Series I, Series J, and Series K Preferred Stock.

~~Activity during the six months ended June 30,~~Series ~~2024~~A Preferred

OnThe Company ~~April~~has 8,designated ~~2024~~10,000 ~~our~~shares ~~former~~of its preferred stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible ~~Chief~~into ~~Executive~~10,000 ~~Officer~~shares ~~exercised~~of 13the Company’s common stock. The holders of outstanding shares of Series A Preferred Stock are entitled to receive dividends,~~344~~ payable quarterly,~~088~~ ~~vested~~out of any assets of the Company legally available therefore, at the rate of $8 per share annually, payable in- preference and priority to any payment of any dividend on the~~-money-options~~ common stock. ~~The~~As ~~exercise~~of ~~was~~September ~~completed~~30, ~~with~~2024 aand ~~cashless~~December ~~transaction~~31, ~~yielding~~2023, athe ~~total~~Company had zero shares of 9Series A Preferred Stock outstanding. As of September 30,~~822~~ 2024 and December 31,~~731~~ ~~newly~~2023, ~~issued~~the ~~shares~~balance owed on the Series A Preferred stock dividend was zero.

~~Activity during the six months ended June 30, 2023~~14

~~On February 8~~AiADVERTISING, ~~2023,~~INC. inAND accordance with Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor, the Company submitted a purchase notice to the investor of a sale by the Company to the investor of 58,000,000 shares of common stock amounting to $230,975.SUBSIDIARIES

OnNOTES ~~February~~TO ~~16,~~CONDENSED ~~2023,~~CONSOLIDATED ~~in accordance~~FINANCIAL ~~with Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited~~STATEMENTS ~~investor,~~- ~~the Company submitted a purchase notice to the investor of a sale by the Company to the investor of 21,649,574 shares of common stock amounting to $110,687.~~UNAUDITED

OnSEPTEMBER ~~February 28~~30, 2023, in accordance with Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor, the Company submitted a purchase notice to the investor of a sale by the Company to the investor of 26,858,175 shares of common stock amounting to $102,110.2024

OnNOTE ~~March~~5. ~~13,~~CAPITAL ~~2023,~~STOCK in accordance with Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor, the Company submitted a purchase notice to the investor of a sale by the Company to the investor of 16,954,805 shares of common stock amounting to $61,367.(continued)

15Series B Preferred

OnThe ~~March~~Company ~~23,~~has ~~2023~~designated 25,000 shares inof ~~accordance with~~its ~~Section~~preferred 2stock as Series B Preferred Stock. Each share of ~~the~~Series ~~purchase~~B ~~agreement,~~Preferred ~~dated~~Stock ~~March~~has ~~28,~~a ~~2022,~~stated ~~and~~value ~~amended~~of on$100. ~~July~~The ~~28,~~Series B ~~2022,~~Preferred ~~between~~Stock ~~the~~is ~~Company~~convertible ~~and~~into anshares ~~accredited~~of ~~investor,~~ the Company’s ~~submitted~~common astock ~~purchase~~in ~~notice~~amount todetermined by dividing the ~~investor~~stated ofvalue by a ~~sale~~conversion price of $0.004 per share. The Series B Preferred Stock does not have voting rights except as required by ~~the~~law ~~Company~~and with respect to certain protective provisions set forth in the ~~investor~~Certificate of 17Designation of Series B Preferred Stock. As of September 30,~~069~~ 2024 and December 31,~~958~~ 2023, the Company has 18,025 shares of ~~common~~Series ~~stock amounting~~B toPreferred ~~$50,867~~Stock outstanding.

OnSeries ~~April~~C 4, 2023, in accordance with Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor (see Note 6), the Company submitted a purchase notice to the investor of a sale by the Company to the investor of 14,620,464 shares of common stock for a purchase price of $0.003 per share amounting to $43,421.Preferred

OnThe ~~June~~Company ~~28,~~has ~~2023~~designated 25,000 shares ~~our~~of ~~former~~its preferred stock as Series C Preferred Stock. Each share of Series C Preferred Stock has a stated value of $100. The Series ~~Chief~~C ~~Financial~~Preferred ~~Officer~~Stock ~~exercised 9,222,228 vested,~~is convertible into shares of the Company’s common stock in- the~~-money-options~~ amount determined by dividing the stated value by a conversion price of $0.01 per share. The ~~exercise~~Series ~~was~~C ~~completed~~Preferred ~~with~~Stock adoes ~~cashless~~not ~~transaction~~have voting rights except as required by law and with ~~yielding~~respect ato ~~total~~certain protective provisions set forth in the Certificate of 3 Designation of Series C Preferred Stock. As of September 30,~~931~~ 2024 and December 31,~~113 newly~~ ~~issued~~2023, the Company has 14,425 shares of Series C Preferred Stock outstanding.

7.Series ~~STOCK~~D ~~OPTIONS AND WARRANTS~~Preferred

The Company has designated 90,000 shares of its preferred stock as Series D Preferred Stock. ~~Options~~Each share of Series D Preferred Stock has a stated value of $100. The Series D Preferred Stock is convertible into common stock at a ratio of 2,500 shares of common stock per share of preferred stock, and pays a quarterly dividend, calculated as (1/90,000) x (5% of the Adjusted Gross Revenue) of the Company’s subsidiary Parscale Digital. Adjusted Gross Revenue means the top line gross revenue of Parscale Digital, as calculated under GAAP (generally accepted accounting principles) less any reselling revenue attributed to third party advertising products or service, such as, but not limited to, search engine keyword campaign fees, social media campaign fees, radio or television advertising fees, and the like. The Series D Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series D Preferred Stock. As of September 30, 2024 and December 31, 2023, the Company had 86,021 shares of Series D Preferred Stock outstanding. During the three months and nine months ended September 30, 2024 and 2023, the Company did not pay any dividends to the holders of Series D Preferred stock. As of September 30, 2024 and December 31, 2023, the balance owed on the Series D Preferred stock dividend was zero.

~~The~~Series ~~Company~~E ~~used the historical industry index to calculate volatility, since the Company’s stock history did not represent the expected future volatility of the Company’s common stock.~~Preferred

The ~~fair~~Company has designated 10,000 shares of its preferred stock as Series E Preferred Stock. Each share of Series E Preferred Stock has a stated value of ~~options~~$100. The Series ~~granted~~E ~~during~~Preferred Stock is convertible into shares of the ~~six~~Company’s ~~months~~common ~~ending~~stock ~~June~~in an amount determined by dividing the stated value by a conversion price of $0.05 per share. The Series E Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series E Preferred Stock. As of September 30, 2024, and December 31, 2023, ~~were~~the ~~determined~~Company ~~using~~had ~~the~~10,000 ~~Black~~shares ~~Scholes~~of ~~method~~Series ~~with~~E ~~the~~Preferred ~~following~~Stock ~~assumptions:~~outstanding.

	Six Months Ended June 30, 2024			Six Months Ended June 30, 2023
Risk free interest rate		3.97	%		4.49	%
Stock volatility factor		132.75	%		206	%
Weighted average expected option life		3.5 years			3.5 years
Expected dividend yield		-	%		-	%

Series F Preferred

AThe ~~summary~~Company has designated 800,000 shares of its preferred stock as Series F Preferred Stock. Each share of Series F Preferred Stock has a stated value of $25. The Series F Preferred Stock is not convertible into common stock. The holders of outstanding shares of Series F Preferred Stock are entitled to receive dividends, at the annual rate of 10%, payable monthly, payable in preference and priority to any payment of any dividend on the Company’s common stock. ~~option~~The ~~activity~~Series F Preferred Stock does not have voting rights, except as required by law and ~~related~~with ~~information~~respect ~~follows:~~to certain protective provisions set forth in the Certificate of Designation. To the extent it may lawfully do so, the Company may, in its sole discretion, after the first anniversary of the original issuance date of the Series F Preferred Stock, redeem any or all of the then outstanding shares of Series F Preferred Stock at a redemption price of $25 per share plus any accrued but unpaid dividends. The Series F Preferred Stock was offered in connection with the Company’s offering under Regulation A under the Securities Act of 1933, as amended. As of September 30, 2024 and December 31, 2023, the Company had zero shares of Series F Preferred Stock outstanding, and the balance on stock dividend was zero.

	Six months ended June 30, 2024					Year ended December 31, 2023
	Options			Weighted average exercise price		Options			Weighted average exercise price
Outstanding - beginning of year		875,566,666		$	0.0086		879,733,332		$	0.0092
Granted		60,000,000			0.0070		100,000,000			0.0100
Exercised		(13,344,088	)		0.0019		(9,222,228	)		0.0057
Forfeited		(666,666	)		0.0019		(94,944,438	)		0.0185
Outstanding - end of the year		921,555,912		$	0.0086		875,566,666		$	0.0086
Exercisable at the end of the year		791,167,784		$	0.0082		764,321,982		$	0.0077
Weighted average fair value of options granted during the period				$	411,824				$	1,000,000

~~As of June 30~~AiADVERTISING, ~~2024, and December 31, 2023, the intrinsic value of the stock options was approximately $0 and $643,860, respectively~~INC. ~~Stock~~AND ~~option expense for the six months ended June 30, 2024, and 2023, was $302,479 and $836,261, respectively.~~SUBSIDIARIES

~~The~~NOTES ~~Black~~TO ~~Scholes~~CONDENSED ~~option valuation~~CONSOLIDATED ~~model~~FINANCIAL ~~was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully~~STATEMENTS ~~transferable.~~- In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.UNAUDITED

16SEPTEMBER 30, 2024

~~The~~NOTE ~~weighted~~5. ~~average~~CAPITAL ~~remaining contractual~~STOCK ~~life of options outstanding as of June 30, 2024, was as follows:~~(continued)

Exercise prices		Number of options outstanding		Weighted Average remaining contractual life (years)
$	0.0018		17,000,000		0.092
$	0.0019		236,555,912		2.08
$	0.0053		10,000,000		5.28
$	0.0068		307,000,000		1.52
$	0.0100		100,000,000		3.93
$	0.0130		15,000,000		5.34
$	0.0131		60,000,000		5.12
$	0.0150		35,000,000		5.15
$	0.0295		81,000,000		0.59
$	0.0070		60,000,000		4.53
			921,555,912

Series G Preferred

~~Warrants~~On February 6, 2020, the Company designated 2,600 shares of its preferred stock as Series G Preferred Stock. Each share of Series G Preferred Stock has a stated value of $100. The Series G Preferred Stock is convertible into shares of the Company’s common stock in an amount determined by dividing the stated value by a conversion price of $0.0019 per share. The Series G Preferred Stock does not have voting rights except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series G Preferred Stock. As of September 30, 2024 and December 31, 2023, the Company had 2,597 shares of Series G Preferred Stock outstanding.

AsSeries ofH ~~June 30, 2024, and December 31, 2023, there were 162,703,869 warrants outstanding. There were no warrants issued during the six months ended June 30, 2024, and 2023.~~Preferred

AOn ~~summary~~March 18, 2021, the Company issued 1,000 shares of its Series H Preferred Stock to the former Chief Executive Officer of the Company, Andrew Van Noy. The Series H Preferred Stock is not convertible into shares of the Company’s ~~warrant~~ ~~activity~~common stock and ~~related~~entitles ~~information~~the ~~follows~~holder to 51% of the voting power of the Company’s shareholders, as set forth in the Certificate of Designation. The 1,000 shares of Series H Preferred stock provided for automatic redemption by the Company at the par value of $0.001 per share on the sooner of: 1) sixty days (60) from the effective date of the Certificate of Designation, 2) on the date Andrew Van Noy ceases to serve as an officer, director or consultant of the Company, or 3) on the date that the Company’s shares of common stock first trade on any national securities exchange. On May 18, 2021, the Company redeemed all shares of Series H Preferred stock.

	Six months ended June 30, 2024				Year ended December 31, 2023
	Warrants		Weighted average exercise price		Warrants		Weighted average exercise price
Outstanding - beginning of period		162,703,869	$	0.048		162,703,869	$	0.048
Issued		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding - end of period		162,703,869	$	0.048		162,703,869	$	0.048
Exercisable at the end of period		162,703,869	$	0.048		162,703,869	$	0.048
Weighted average fair value of warrants granted during the period			$	-			$	-

On September 29, 2021, the Company filed a certificate of withdrawal with the Secretary of State of Nevada, to withdraw the Company’s existing certificate of designation of Series H Preferred Stock, filed a certificate of designation for a new series of Series H Preferred Stock with the Secretary of State of Nevada, and issued 1,000 shares of Series H Preferred Stock to Andrew Van Noy, the Company’s chief executive officer, for services rendered. As of September 30, 2024 and December 31, 2023, the Company had zero shares of Series H Preferred stock outstanding.

~~Warrant~~Series ~~expense~~I ~~for the six months ended June 30, 2024, and 2023 was $0.~~Preferred

8On April 10, 2023, the Company designated 3,000,000 shares of its preferred stock as Series I Preferred Stock. ~~RELATED~~Each ~~PARTIES~~share of Series I Preferred Stock has a stated value of $0.001. The Series I Preferred Stock is convertible into shares of the Company’s common stock at the option of the shareholder, at any time and from time to time, into four hundred (400) fully paid and non-assessable shares of Common stock. The Series I Preferred Stock has voting rights equal to 400 common votes per Series I share on all matters upon which the holders of Common stock of the Company are entitled to vote, except as required by law and with respect to certain protective provisions set forth in the Certificate of Designation of Series I Preferred Stock.

InOn ~~March~~April 11, 2023, ~~the~~Hexagon Partners, Ltd. “Hexagon” purchased 2,272,727 shares of Series I Preferred Stock at of $2.20 at per share. The Company ~~contracted~~also ~~with~~granted ~~Parscale~~Hexagon, ~~Strategy~~a tosix ~~bolster~~month ~~sales~~option ~~efforts~~(the “Hexagon Purchase Agreement”) from the date of the initial closing to purchase ~~bring~~(i) inup ~~new~~to ~~clients.~~333,333 ~~Parscale~~additional ~~Strategy~~shares isof ~~wholly~~Series ~~owned~~I byPreferred ~~Brad~~Stock ~~Parscale~~for a purchase price of $6.00 per share, and (ii) up to ~~Post~~312,500 ~~Hexagon~~shares ~~Partners~~of ~~purchasing~~Series 49I Preferred Stock for a purchase price of $7.20 per share. For so long as at least 50% of the ~~outstanding~~Series ~~capital~~I Preferred Stock purchased has not been redeemed by the Company or converted into common stock of the Company, inHexagon ~~April~~will ~~2023,~~have ~~Brad~~the right ~~Parscale~~to isdesignate notwo ~~longer~~directors ato ~~related party~~the Company’s Board of Directors (the “Board”), and the ~~contract~~Company ismay ~~still~~not increase inthe ~~effect~~size as of ~~June~~the ~~30,~~Board ~~2024~~above six directors without Hexagon’s prior written consent.

InOn ~~February~~January ~~2023~~29, ~~The~~2024, ~~Design~~the ~~Annex~~Company and ~~contracted~~Hexagon ~~with~~Partners amended the ~~Company~~terms toof ~~outsource~~the Hexagon Purchase Agreement (the “Amendment”). The Amendment provides for a ten-month ~~certain~~option ~~creative~~from ~~design~~the ~~and~~initial ~~social~~closing ~~media~~of ~~marketing~~the ~~activities~~Purchase ~~and~~Agreement, ~~AiAdvertising~~to ~~contracted~~purchase ~~with~~(i) ~~The~~a ~~Design~~second ~~Annex~~tranche consisting of up to ~~perform~~892,857 ~~certain~~additional ~~creative~~shares ~~design~~of ~~activities.~~Preferred ~~The~~Stock, ~~Design~~at ~~Annex~~2.80 isper ~~wholly~~share ~~owned~~(the by“Tranche ~~Jill~~B ~~Giles.~~Option”), ~~Post~~and ~~Hexagon~~(ii) ~~Partners~~a ~~purchasing~~third ~~49%~~tranche consisting of ~~the~~up ~~outstanding~~to ~~capital~~168,269 ~~stock~~additional shares of Preferred Stock, at $10.40 per share. On January 30, 2024, the Purchaser exercised the Tranche B Option, and the Company insold to ~~April~~the ~~2023~~Purchaser 892,857 ~~Jill~~shares ~~Giles~~of isSeries noI ~~longer~~Preferred Stock at $2.80 per share for gross proceeds of $2,500,000. The Company did not have a ~~related~~sufficient ~~party~~number of shares of Series I Preferred Stock authorized at the time the 892,857 shares were sold, and the ~~contracts~~amount ~~are~~of ~~still~~$2,500,000 has inbeen ~~effect~~recorded as Preferred Stock Payable on the Company’s accompanying condensed balance sheet as of ~~June~~September 30, 2024, See Note 10.

9.As ~~CONCENTRATIONS~~ of September 30, 2024 and December 31, 2023, the Company had 2,272,727 shares of Series I Preferred Stock outstanding.

For the six months ended June 30, 2024, and 2023, the Company had five and three major customers who represented approximately 55% and 63% of total revenue, respectively. At June 30, 2024 and December 31, 2023, accounts receivable from two and three customers represented approximately 47% and 72% of total accounts receivable, respectively. The two customers comprising the concentration within the accounts receivable are not included in the five customers that comprise the concentration with the revenues discussed above.16

17AiADVERTISING, INC. AND SUBSIDIARIES

~~10.~~NOTES ~~COMMITMENTS~~TO ~~AND~~CONDENSED ~~CONTINGENCIES~~CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

~~Leases~~SEPTEMBER 30, 2024

InNOTE ~~February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases~~5. ~~The~~CAPITAL ~~new~~STOCK ~~standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use~~ (~~“ROU”~~continued) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement, over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current liabilities, and long-term liabilities on our consolidated balance sheets.

~~The~~Series ~~Company~~J ~~adopted~~Junior ~~the~~Participating new lease guidance effective January 1, 2019, using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The Company has elected the practical expedient to combine lease and non-lease components as a single component. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity.Preferred

~~The~~On ~~interest~~June ~~rate~~7, ~~implicit~~2023, the Company indesignated ~~lease~~700,000 ~~contracts~~shares isof ~~typically~~its ~~not~~preferred ~~readily~~stock ~~determinable~~as Series J Junior Participating Preferred Stock. AsEach ~~such~~share of Series J Preferred Stock has a stated value of $0.001. Pursuant to the Rights Agreement, the ~~Company~~Board ~~utilizes~~declared ~~its~~a ~~incremental~~dividend ~~borrowing~~distribution ~~rate~~of one preferred share purchase right (a “Right”) for each outstanding share of ~~10%~~common stock, ~~which~~held isby the shareholders of the Company at the close of business on June 7, 2023 (the ~~rate~~“Record ~~incurred~~Date”). Holders of the Company’s warrants and certain of its existing preferred stock (including the Series I Preferred stock issued pursuant to ~~borrow~~the onPurchase aAgreement) ~~collateralized~~as ~~basis~~of ~~over~~the aRecord ~~similar~~Date ~~term~~were analso ~~amount~~issued ~~equal~~one Right for each share of common stock that such holders would be entitled to receive upon full exercise or conversion of their warrants or existing preferred stock, as applicable. Each Right will entitle the ~~lease~~holder ~~payments~~to inpurchase one ten-thousandth of a ~~similar~~share ~~economic~~of Series J Junior Participating Preferred ~~environment~~Stock, of the Company (the “Series J Preferred Shares”) at the purchase price set forth in the Rights Agreement. InIf ~~calculating~~issued, holders of the ~~present~~Series J Preferred Stock shall be entitled to receive 10,000 times the value of ~~the~~all ~~lease~~declared ~~payments~~cash and non-cash dividends paid to any and all junior classes of capital stock. The Series J Preferred Stock has voting rights equal to 10,000 votes on all matters upon which the holders of Common stock of the Company ~~elected~~is entitled to ~~utilize~~vote, ~~its~~except ~~incremental~~as ~~borrowing~~required ~~rate~~by ~~based~~law and with respect to certain protective onprovisions set forth in the ~~remaining~~Certificate ~~lease~~of ~~terms~~Designation asof Series J Preferred Stock. As of ~~the~~September ~~January~~30, 12024 and December 31, ~~2019~~2023, ~~adoption~~the Company ~~date~~had zero shares of Series J Preferred Stock outstanding.

~~Operating~~Series ~~lease~~K ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of 1 year to 3 years, some of which include options to extend the lease term for up to an undetermined number of years.Preferred

~~Operating~~On ~~Leases~~March 21, 2024, the Company designated 1,000 shares of its preferred stock as Series K Preferred Stock. The Series K Preferred Stock is not convertible into shares of the Company’s common stock and entitles the holder to 51% of the voting power of the Company’s shareholders, as set forth in the Certificate of Designation. As of September 30, 2024, the Company had 1,000 shares of Series K Preferred Stock outstanding and held by Gerard Hug, the Chief Executive Officer of the Company. The 1,000 shares of Series K Preferred stock provided for automatic redemption by the Company at the par value of $0.001 per share on the sooner of: 1) sixty days (60) from the effective date of the Certificate of Designation, 2) on the date Gerard Hug ceases to serve as an officer, director or consultant of the Company, or 3) on the date that the Company’s shares of common stock first trade on any national securities exchange. For the quarter ended March 31, 2024, the Company used a third party valuation firm to compute estimated the fair value of the Series K Preferred share to be $477,000 or $0.0059 per share, which was included selling, general, and administrative expenses on the statements of operations and in cash flows from operating activities on the statements in of cash flows.

On ~~August~~May 120, ~~2022~~2024, the Company ~~signed~~redeemed ~~a lease agreement with JJ Real Co., an unrelated party, which commenced on August~~ 1, ~~2022, for approximately 2,~~000 ~~square~~shares ~~feet, located~~of atits ~~1114~~Series SK ~~St.~~Preferred ~~Mary’s~~stock ~~Street~~at -its ~~Suite~~par ~~120,~~value ~~San~~of ~~Antonio, TX 78210, for~~ $~~3,333~~0.001 per ~~month, includes a pro rata~~ share ~~of the common building expenses and each year the monthly lease payment is subject to change per the lease agreement~~. The lease expires on July 31, 2027. The lease expiration is greater than twelve months, thus included on the Balance Sheet as Right-of-Use lease. This lease does not include a residual value guarantee, nor do we expect any material exit costs. As of ~~August~~September ~~1, 2022, we determined that this lease meets the criterion to be classified as a ROU Asset and is included on the balance sheet as Right-Of-Use Assets. As of June~~ 30, 2024, ~~and~~there ~~December 31, 2023, the ROU asset and liability balances of this lease~~ were ~~$125,692~~0 ~~and $147,480, respectively. During February 2023, JJ Real Co~~shares ~~transferred ownership~~ of ~~the~~Series ~~building,~~K ~~and~~Preferred ~~our~~Stock ~~lease located at 1114 S St~~outstanding. ~~Mary’s - Suite 120, San Antonio, TX 78210, to Hooks Holding Ltd., a non-related party. No details of our lease or commitments have changed with the ownership transfer.~~

~~The~~Common ~~following is a schedule, by years, of future minimum lease payments required under the operating and finance leases.~~Stock

	ROU Operating Leases
Six months ending December 31, 2024		35,834
Year ending December 31, 2025		49,333
Year ending December 31, 2026		51,333
Year ending December 31, 2027		17,333
Year ending December 31, 2028		—
Thereafter		—
Total	$	153,833
Less imputed interest		(22,308	)
Total liability	$	131,525

Activity during the nine months ended September 30, 2024

18On April 8, 2024, the Company’s former Chief Executive Officer exercised 13,344,088 vested options. The exercise was completed on a cashless basis for 9,822,731 shares of common stock.

~~Other~~Activity ~~information~~during ~~related to~~the ~~leases~~nine ismonths asended ~~follows:~~September 30, 2023

Lease Type		Weighted Average Remaining Term		Weighted Average Discount Rate (1)
Operating Leases		37 months			10	%

On March 28, 2022, the Company entered into a purchase agreement with an accredited investor to purchase up to $10,000,000 of shares (“Purchase Shares”) of the Company’s common stock. The Company has the right, in its sole discretion, subject to the conditions and limitations in the Purchase Agreement, to direct the investor, by delivery of a purchase notice from time to time (a “Purchase Notice”) to purchase (each, a “Purchase”) over the one-year term of the Purchase Agreement, a minimum of $10,000 and up to a maximum of the lower of: (1) one hundred percent (100%) of the average daily trading dollar volume of the Company’s common stock during the ten trading days preceding the Purchase Date; or (2) one million dollars ($1,000,000), provided that the parties may agree to waive such limitations. The aggregate value of Purchase Shares sold to the investor may not exceed $10,000,000. Each Purchase Notice will set forth the Purchase Price and number of Purchase Shares in accordance with the terms of the Purchase Agreement. The number of Purchase Shares the Company issue under each Purchase will be equal to 112.5% of the Purchase Amount sold under such Purchase, divided by the Purchase Price per share (as defined under the Purchase Agreement). The Purchase Price was defined as the lower of (a) 90% of the lowest volume weighted average price during the Valuation Period; or (b) the closing price for the Company’s common stock on the trading day preceding the date of the Purchase Notice. The Purchase Price was subject to a floor of $0.01 per share, at or below which the Company could not deliver a Purchase Notice. The Valuation Period is the ten consecutive business days immediately preceding, but not including the date a Purchase Notice is delivered.

~~(1) This discount rate is consistent with our borrowing rates from various lenders.~~17

~~Legal~~AiADVERTISING, ~~Matters~~INC. AND SUBSIDIARIES

~~The~~NOTES ~~Company~~TO ~~may~~CONDENSED beCONSOLIDATED ~~involved in~~FINANCIAL ~~legal actions and claims arising in the ordinary course of business, from time to time, none of which at this time the Company considers~~STATEMENTS to- ~~be material to the Company’s business or financial condition.~~UNAUDITED

~~11.~~SEPTEMBER ~~SUBSEQUENT~~30, ~~EVENTS~~2024

~~Management~~NOTE ~~has~~5. ~~evaluated subsequent~~CAPITAL ~~events~~STOCK ~~according to ASC TOPIC 855 as the date of the financial statements and has determined the following reportable events:~~(continued)

On ~~October~~February 98, ~~2024~~2023, ~~the Company~~pursuant ~~filed~~to aSection ~~Certificate~~2 of ~~Amendment with~~ the ~~Secretary~~purchase ofagreement, ~~State~~dated ofMarch ~~the State of Nevada (the “Certificate of Amendment”)~~28, ~~thereby amending the Certificate of Designation of Preferences~~2022, ~~Rights~~ and ~~Limitations~~amended ~~of Series~~on IJuly ~~Preferred Stock~~28, ~~as previously filed with the Secretary of State of the State of Nevada on April 10~~2022, ~~2023~~between (the ~~“Certificate~~Company ofand ~~Designation”).~~an ~~The~~accredited ~~Certificate of Amendment~~investor, ~~amended~~ the ~~Certificate~~Company ofissued ~~Designation to increase the authorized number of shares of Series I Preferred Stock from 3~~58,000,000 toshares ~~3,400,000. The Certificate~~ of ~~Amendment~~common ~~became~~stock ~~effective~~for ~~with~~gross ~~the~~proceeds ~~Secretary~~ of ~~State~~$231,000, ofor ~~the~~$.0039 ~~State~~per ~~of Nevada upon filing~~share.

On ~~October~~February 1116, ~~2024~~2023, pursuant to Section 2 of the ~~Company~~purchase ~~issued~~agreement, ~~892~~dated March 28,~~857 shares~~ of2022, ~~Series~~and Iamended ~~Preferred~~on ~~Stock~~July ~~which~~28, ~~had~~2022, ~~previously~~between ~~been~~the ~~subscribed~~Company atand aan ~~price~~accredited investor, the Company issued 21,649,574 shares of common stock for gross proceeds of $2110,700, or $0.800051 per share.

19On February 28, 2023, pursuant to 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor, the Company issued 21,649,574 shares of common stock for gross proceeds of $102,100, or $0.0036 per share.

On March 13, 2023, pursuant to Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor, the Company issued 16,954,805 shares of common stock for gross proceeds of $61,400 or $0.0036 per share.

On March 23, 2023, pursuant to Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor, the Company issued 17,069,958 shares of common stock for gross proceeds of $50,900 or $0.0030 per share.

On April 4, 2023, pursuant to Section 2 of the purchase agreement, dated March 28, 2022, and amended on July 28, 2022, between the Company and an accredited investor (see Note 6) the Company issued 14,620,464 shares of common stock for gross proceeds of $43,400 or $0.0030 per share.

On June 28, 2023, the Company’s former Chief Financial Officer exercised 9,222,228 vested options. The exercise was completed with a cashless basis for the issuance of 3,931,113 common shares of common stock.

NOTE 6. STOCK OPTIONS AND WARRANTS

Stock Options

The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility and expected term. The expected volatility is based on the historical industry index volatility. The Company’s stock history did not represent the expected future volatility of the Company’s common stock. Any changes in these highly subjective assumptions significantly impact stock-based compensation expense.

AiADVERTISING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

SEPTEMBER 30, 2024

NOTE 6. STOCK OPTIONS ANDE WARRANTS (continued)

The fair value of options granted during the nine months ending September 30, 2024 and 2023, were determined using the Black Scholes option method with the following assumptions:

	Three and Nine Months Ended
	September 30, 2024			September 30, 2023
Risk-free rate		3.97	%		4.59	%
Volatility		132.75	%		206	%
Weighted average expected option life		3.5 years			3.5 years
Dividend yield		-	%		-	%

A summary of the Company’s stock option activity and related information follows:

	Options			Weighted average exercise price
Outstanding, December 31, 2023		875,566,666		$	0.0086
Granted		60,000,000			0.0070
Exercised		(13,344,088	)		0.0019
Forfeited		(666,666	)		0.0019
Outstanding -September 30, 2024		921,555,912		$	0.0086
Exercisable as of September 30, 2024		811,416,186		$	0.0084
Weighted average fair value of options granted during the period				$	411,800

As of September 30, 2024 and December 31, 2023, the intrinsic value of the stock options was $0 and $643,860, respectively. Stock-compensation expense related to stock options for the three months ended September 30, 2024 and 2023 was y $304,440 and $417,382, respectively. Stock-based compensation expense for the nine months ended September 30,2024 and 2023 was $1,381,422 and $1,253,643, respectively. As of September 30, 2024, unrecognized stock-based compensation of $1,109,489 is expected to be recognized over the remaining weighted average vesting periods of 1.5 years for outstanding grants.

The Black Scholes option valuation model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The table below summarizes the issued and outstanding options as of September 30, 2024:

Exercise prices		Number of options outstanding		Weighted average remaining contractual life (years)

$	0.0018		17,000,000		0.067
$	0.0019		236,555,912		1.83
$	0.0053		10,000,000		5.03
$	0.0068		307,000,000		1.27
$	0.0100		100,000,000		3.67
$	0.0130		15,000,000		5.09
$	0.0131		60,000,000		4.87
$	0.0150		35,000,000		4.90
$	0.0295		81,000,000		0.34
$	0.0070		60,000,000		4.27
			921,555,912

AiADVERTISING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

SEPTEMBER 30, 2024

NOTE 6. STOCK OPTIONS ANDE WARRANTS (continued)

Warrants

As of September 30, 2024 and December 31, 2023, there were 162,703,869 warrants outstanding. There were no warrants issued during the three and nine months ended September 30, 2024 and 2023.

A summary of the Company’s warrant activity and related information is follows:

	Warrants		Weighted average exercise price
Outstanding as of December 31, 2023		162,703,869	$	0.048
Issued		-		-
Exercised		-		-
Forfeited		-		-
Outstand as of, September 30, 2024		162,703,869	$	0.048
Exercisable as of September 30, 2024		162,703,869	$	0.048
Weighted average fair value of warrants granted during the period			$	-

The Company did not incur any warrant expense for any periods presented.

The table below summarizes the issued and outstanding warrants as of September 30, 2024:

Exercise prices		Warrants outstanding		Date of expiration

$	0.00875		10,714,286	February 14, 2026
$	0.0454		151,000,000	February 14, 2026
$	0.0072		989,583	December 15, 2025
			162,703,869

NOTE 7. RELATED PARTIES

In March 2023, AiAdvertising contracted with Parscale Strategy to bolster sales efforts to bring in new clients. Parscale Strategy is wholly owned by Brad Parscale. Post Hexagon Partners purchasing 49% of the outstanding capital stock of AiAdvertising in April 2023, Brad Parscale is no longer a related party, and the contract is still in effect as of September 30, 2024.

In February 2023, The Design Annex contracted with AiAdvertising to outsource certain creative design and social media marketing activities and AiAdvertising contracted with The Design Annex to perform certain creative design activities. The Design Annex is wholly owned by Jill Giles. Post Hexagon Partners purchasing 49% of the outstanding capital stock of AiAdvertising in April 2023, Jill Giles is no longer a related party, and the contracts are still in effect as of September 30, 2024.

AiADVERTISING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

SEPTEMBER 30, 2024

NOTE 8. CONCENTRATIONS

The following represents clients who have ten percent of total accounts receivable as of September 30, 2024, and December 31, 2023.

	As of (12 31 2023 open)
	September 30, 2024			December 31, 2023
Client 1		20.0	%		13.9	%
Client 2		19.4	%		1.2	%
Client 3		12.5	%		1.8	%
Client 4		-	%		24.9	%
Client 5		-	%		14.2	%

The following represents clients who have ten percent of gross revenues for the three months ended September 30, 2024 and 2023:

	As of
	September 30, 2024			September 30, 2023
Client 1		25.6	%		19.4	%
Client 2		11.7	%		11.5	%
Client 3		11.6	%		10.4	%
Client 4		10.4	%		11.0	%

The following represents clients who have ten percent of gross revenues for the nine months ended September 30, 2024, and 2023:

	As of
	Nine Months Ended
	September 30, 2024			September 30, 2023
Client 1		19.4	%		11.4	%
Client 2		11.5	%		9.0	%
Client 3		10.4	%		9.8	%
Client 4		11.0	%		17.6	%

NOTE 9. COMMITMENTS AND CONTINGENCIES

Leases

Operating lease

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the accompanying balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations, over the expected term on a straight-line basis. Operating leases are recognized on the accompanying consolidated balance sheets as right-of-use asset, current operating lease liabilities and non-current operating lease liabilities. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the accompanying Company’s consolidated balance sheets. Finance leases are included in property and equipment, current liabilities, and long-term liabilities on the accompanying Company’s consolidated balance sheets.

On August 1, 2022, the Company entered into a five year lease for approximately 2,000 square feet, located in San Antonio, TX for its creative office. The average monthly payment over the lease term is $4,000 and is subject to its pro rata share of the common building expenses. This lease does not include a residual value guarantee, nor does the Company expect any material exit costs. The Company has determined that this lease meets the criterion to be classified as a right-of use asset and is included on the accompanying condensed balance sheets. As of September 30, 2024, the right-of-use asset and operating lease liability balance on the accompanying condensed balance sheets for this lease were $116,910 and $122,910, respectively. As of December 31, 2023, the right-of-use asset and operating lease liability on the accompanying condensed balance sheets lease were $147,480 and $147,479, respectively.

AiADVERTISING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

SEPTEMBER 30, 2024

NOTE 9. COMMITMENTS AND CONTINGENCIES (continued)

The following schedule of the Company’s future minimum operating lease payments are as follows:

Year ending December 31,	Minimum lease commitment
Remainder of 2024	$	12,000
2025		48,833
2026		50,833
2027		30,334
Total		142,000
Less imputed interest		(19,090	)
Total liability	$	122,910

Other information related to the lease is as follows:

Lease type		Weighted average remaining term		Weighted average discount rate
Operating lease		34 months			10	%

Legal Matters

The Company may be involved in legal actions and claims arising in the ordinary course of business, from time to time, none of which at this time the Company considers to be material to the Company’s business or financial condition.

NOTE 10. SUBSEQUENT EVENTS

Management has evaluated subsequent events according to ASC TOPIC 855 as the date of the Consolidated Financial Statements and has determined the following reportable events:

On October 9, 2024, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada (the “Certificate of Amendment”), thereby amending the Certificate of Designation of Preferences, Rights and Limitations of Series I Preferred Stock, as previously filed with the Secretary of State of the State of Nevada on April 10, 2023 (the “Certificate of Designation”). The Certificate of Amendment amended the Certificate of Designation to increase the authorized number of shares of Series I Preferred Stock from 3,000,000 to 3,400,000. The Certificate of Amendment became effective with the Secretary of State of the State of Nevada upon filing.

On October 11, 2024, the Company issued 892,857 shares of Series I Preferred Stock which had previously been subscribed at $2.80 per share.

On November 8, 2024, Kevin Myers was terminated as Chief Marketing Officer of the Company. Pursuant to the terms of Mr. Myers’ employment agreement, upon termination, Mr. Myers is deemed to have resigned as a member of the Board of Directors of the Company.

On November 20, 2024, John Small provided notice of his decision to resign as Chief Financial Officer of the Company effective November 22, 2024. On November 15, 2024, Douglas Beck, CPA was appointed Chief Financial Officer of the Company, effective November 22, 2024.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statements

The following Management’s Discussion and Analysis should be read in conjunction with our Consolidated Financial Statements and the related notes thereto as set forth in our Form 10-K for the year ended December 31, 2023, and the Consolidated Financial Statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, herein, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this quarterly report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under the “Risk Factors” section of the reports we file with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report, except as may by required under applicable law.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Form 10-Q and the documents that we reference in this Form 10-Q completely and 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. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

AiAdvertising, Inc. and AiAdvertising logo and other trademarks or service marks of AiAdvertising, Inc. appearing in this Form 10-Q are the property of AiAdvertising, Inc. This Form 10-Q also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this Form 10-Q appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames.

Overview-

AiAdvertising’s primary focus is to disrupt the digital advertising world by offering a solution that harnesses the power of artificial intelligence (AI) to enable marketers to increase productivity, efficiency, and performance.

Critical Accounting Policies

~~Our~~There ~~discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which~~ have been ~~prepared~~no inmaterial ~~accordance with accounting principles generally accepted~~ changes in ~~the~~our ~~United~~Critical ~~States.~~Accounting ~~The~~Estimates ~~preparation of~~from ~~these financial statements requires us to make estimates and judgments that affect~~ the ~~reported~~information ~~amounts~~provided ofin assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments, particularly those related to the ~~determination~~“Critical ofAccounting ~~the~~Policies” ~~estimated~~section ~~recoverable amounts~~ of ~~trade accounts receivable, impairment~~“Item ~~of long~~7-~~lived~~ ~~assets,~~Management’s ~~revenue~~Discussion ~~recognition,~~ and ~~deferred~~Analysis ~~tax~~of ~~assets.~~Financial WeCondition ~~believe the following critical accounting policies require more significant judgment~~ and ~~estimates~~Results ~~used~~of Operations” in the ~~preparation~~Company’s ofForm ~~the financial statements~~10-K.

Among the significant judgments made by management in the preparation of our financial statements are the following:

Revenue Recognition

On January 1, 2018, the Company adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The adoption of ASC 606 did not have a material impact on the Company’s Consolidated Financial Statements. See footnote 3 for a disclosure of our use of estimates and judgement, as it relates to revenue recognition.

● The Company is primarily in control of the inputs of the project and responsible for the completion of the client contract;

● We have discretion in establishing price; and

● We have discretion in supplier selection.

Accounts Receivable

The Company extends credit to its customers, who are located nationwide. Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations of its customers’ financial condition. Management reviews accounts receivable on a regular basis, based on contracted terms and how recently payments have been received to determine if any such amounts will potentially be uncollected. The Company includes any balances that are determined to be uncollectible in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off. The balances of the allowance account at June 30, 2024 and December 31, 2023 were $70,796 and $191,889, respectively.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value. Fair value is determined by an evaluation of available price information at which assets could be bought or sold, including quoted market prices, if available, or the present value of the estimated future cash flows based on reasonable and supportable assumptions.

Indefinite Lived Intangibles and Goodwill Assets

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

The Company tests for indefinite lived intangibles and goodwill impairment in the fourth quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed a qualitative assessment of indefinite lived intangibles and goodwill at December 31, 2023 and determined the fair value of each intangible asset and goodwill did not exceed the respective carrying values. Therefore, no impairment of indefinite lived intangibles and goodwill was recognized.

The impairment test conducted by the Company includes an assessment of whether events occurred that may have resulted in impairment of goodwill and intangible assets. Because it was determined that events had occurred which effected the fair value of goodwill and intangible assets, the Company conducted the two-step approach to determine the fair value and required adjustment. The steps are as follows:

1. Based on the totality of qualitative factors, determine whether the carrying amount of the intangible asset may not be recoverable. Qualitative factors and key assumptions reviewed include the following:

● Increases in costs, such as labor, materials or other costs that could negatively affect future cash flows. The Company assumed that costs associated with labor, materials, and other costs should be consistent with fair market levels. If the costs were materially higher than fair market levels, then such costs may adversely affect the future cash flows of the Company or reporting units.

● Financial performance, such as negative or declining cash flows, or reductions in revenue may adversely affect recoverability of the recorded value of the intangible assets. During our analysis, the Company assumes that revenues should remain relatively consistent or show gradual growth month-to-month and quarter-to-quarter. If we report revenue declines, instead of increases or flat levels, then such condition may adversely affect the future cash flows of the Company or reporting units.

● Legal, regulatory, contractual, political, business or other factors that could affect future cash flows. During our analysis, the Company assumes that the legal, regulatory, political or business conditions should remain consistent, without placing material pressure on the Company or any of its reporting units. If such conditions were to become materially different than what has been experienced historically, then such conditions may adversely affect the future cash flows of the Company or reporting units.

● Entity-specific events such as losses of management, key personnel, or customers, may adversely affect future cash flows. During our analysis, the Company assumes that members of management, key personnel, and customers will remain consistent period-over-period. If not effectively replaced, the loss of members of management and key employees could adversely affect operations, culture, morale and overall success of the company. In addition, if material revenue from key customers is lost and not replaced, then future cash flows will be adversely affected.

● Industry or market considerations, such as competition, changes in the market, changes in customer dependence on our service offering, or obsolescence could adversely affect the Company or its reporting units. We understand that the market we serve are constantly changing, requiring us to change with it. During our analysis, we assume that we will address new opportunities in service offering and industries served. If we do not make such changes, then we may experience declines in revenue and cash flow, making it difficult to re-capture market share.

● Macroeconomic conditions such as deterioration in general economic conditions or limitations on accessing capital could adversely affect the Company. During our analysis, we acknowledge that macroeconomic factors, such as the economy, may affect our business plan because our customers may reduce budgets for our services. If there are material declines in the economy, which lead to reductions in revenue then such conditions may adversely affect the Company.

2. Compare the carrying amount of the intangible asset to the fair value.

3. If the carrying amount is greater than the fair value, then the carrying amount is reduced to reflect fair value.

During the six months ended June 30, 2024, the Company decided not to renew its rights to the domain name “CLOUDCOMMERCE.COM” and recorded an impairment to intangible assets in the amount of $20,202.

Goodwill and Intangible assets are comprised of the following, presented as net of amortization:

	June 30, 2024
	AiAdvertising		Total
Domain name		-		-
Total	$	-	$	-

	December 31, 2023
	AiAdvertising		Total
Domain name		20,202		20,202
Total	$	20,202	$	20,202

Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Fair value of financial instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities are carried at cost, which approximates their fair value, due to the relatively short maturity of these instruments. As of June 30, 2024, and December 31, 2023, the Company has zero notes payable.

Fair value is defined as the price to sell an asset or transfer a liability, between market participants at the measurement date. Fair value measurements assume that the asset or liability is (1) exchanged in an orderly manner, (2) the exchange is in the principal market for that asset or liability, and (3) the market participants are independent, knowledgeable, able and willing to transact an exchange. Fair value accounting and reporting establishes a framework for measuring fair value by creating a hierarchy for observable independent market inputs and unobservable market assumptions and expands disclosures about fair value measurements. Considerable judgment is required to interpret the market data used to develop fair value estimates. As such, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current exchange. The use of different market assumptions and/or estimation methods could have a material effect on the estimated fair value.

Off-Balance Sheet Arrangements

None

Recent Accounting Pronouncements

The Company does not elect to delay complying with any new or revised accounting standards, but to apply all standards required of public companies, according to those required application dates.

Management reviewed accounting pronouncements issued during the quarter ended June 30, 2024, and no pronouncements were adopted during the period.

Management reviewed accounting pronouncements issued during the year ended December 31, 2023, and no pronouncements were adopted during the period.

Recent Developments

Certificate of Amendment to Certificate of Designation of Series I Preferred Stock

On October 9, 2024, wethe ~~filed~~Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada (the “Certificate of Amendment”), thereby ~~amending~~ amending the Certificate of Designation of Preferences, Rights and Limitations of Series I Preferred Stock, as previously filed with the ~~Secretary~~ Secretary of State of the State of Nevada on April 10, 2023 (the “Certificate of Designation”). The Certificate of Amendment ~~amended~~ amended the Certificate of Designation to increase the authorized number of shares of Series I Preferred Stock from 3,000,000 to 3,400,000. ~~The~~ The Certificate of Amendment became effective with the Secretary of State of the State of Nevada upon filing. As of October 11,2024 the Company issued and sold an aggregate of 3,165,584 shares of Series I Preferred Stock pursuant to the that certain Securities Purchase Agreement dated as of April 10, 2023, as subsequently amended.

~~Results of Operations for the Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023~~23

~~REVENUE~~Results of Operations for the Three Months Ended September 30, 2024 as Compared to the Three Months September Ended 2023

Total revenue for the three months ended June 30, 2024, increased by $713,688 to $2,307,729, compared to $1,594,041 for the three months ended June 30, 2023. The increase was primarily due to increases in Digital Marketing, Creative Design, and Platform License fees.REVENUES

~~COST~~Revenues OFfor ~~REVENUE~~the three months ended, September 30, 2024, increased by $147,373 to $2,236,899, compared to $2,089,526 for the three months ended September 30, 2023. The increase was primarily from digital marketing.

~~Cost~~COST ofOF revenue for the three months ended June 30, 2024, increased by $505,930 to $2,459,866, compared to $1,953,936 for the three months ended June 30, 2023. The increase was primarily due to the increase in purchased media within digital marketing. REVENUES

Cost of revenues for the three months ended September 30, 2024, decreased by $141,554 to $1,857,465 compared to $1,999,019 for the three months ended September 30, 2023. The decrease was due to an increase in the use of Company’s platform by its customers for certain revenues that had an associated fixed costs to them, and there was a reduction in head count.

GROSS PROFIT

Gross profit for the three months ended September 30, 2024, increased by $288,927 to $379,434 compared to $90,507 for the three months ended September 30, 2023. Gross profit margin for the three months ended September 30, 2024, increased by 14% to 17% compared to 3% for the three months ended September 30, 2023. The increase was due new customer contracts that had on boarding fees, the increase of use of the Company’s platform by its customers of certain revenues that had fixed costs associated to them and a reduction in head count.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ~~(SG&A)~~ expenses for the three months ended ~~June~~September 30, 2024, decreased by a $~~658~~257,~~359~~832 to $1,~~306~~366,~~990~~830 compared to $1,~~965~~624,~~349~~662 for the three ~~months~~ months ended ~~June~~September 30, 2023. The decrease was primarily due toa ~~concerted~~decrease ~~efforts~~in tonon-cash ~~reduce~~stock-based ~~costs~~compensation ~~across all~~ expense ~~categories,~~of ~~including payroll~~$112, ~~promotion~~940, salaries and ~~research~~benefits of $99,792 and ~~development~~cloud-based tools of a $53,447.

OTHER INCOME (EXPENSE)

Total other income (expense) for the three months ended June 30, 2024, was $3,898, a change of $438,919 compared to other income (expense) of ($435,021) for the three months ended June 30, 2023. The Company received an ERC tax credit in the amount of $435,021 during the prior period for maintaining employment during the COVID-19 crisis; there was no comparable transaction during the current period.

NET LOSS

~~The~~Net ~~net~~ loss for the three ~~months~~ months ended ~~June~~September 30, 2024, was $1986,~~463~~977,~~025,~~ a decrease of $~~427~~547,~~198~~178 compared to the net loss of $1,~~890~~534,~~223~~155 for the three months ended ~~June~~September 30, 2023. The decrease in net loss for the period was based primarily ~~due~~as todescribed ~~increased revenue, combined with reduced SG&A expenses, slightly offset by higher media purchasing costs~~above.

Results of Operations for the ~~Six~~Nine Months Ended ~~June~~September 30, 2024, ~~Compared~~as compared to the ~~Six~~Nine Months Ended ~~June~~September 30, 2023

~~REVENUE~~REVENUES

~~Total~~Revenues ~~revenue~~ for the ~~six months~~nine months ended ~~June~~September 30, 2024, increased by $~~558~~705,~~259~~622 to 4$6,~~327~~563,~~052~~951 compared to $35,~~768~~858,~~793 for the six months ended June 30, 2023~~329. ~~The~~This increase was primarily due to andigital ~~increase~~marketing, creative indesign ~~Creative Design~~ and ~~Platform~~platform ~~License~~license fees.

23COST OF REVENUES

~~COST~~Cost OFof ~~REVENUE~~revenues for the nine months ended September 30, 2024, increase by $504,200 to 6,112,604 compared to a $5,608,404. This was a result of increased revenues; however, the Company experienced efficiencies with the costs of revenues. There was an increase in the use by the Company’s customers of its platform of certain revenues, that had associated fixed costs. In addition, there was a reduction head count.

~~Cost~~GROSS of revenue for the six months ended June 30, 2024, increased by $645,754 to $4,255,139 compared to $3,609,385 for the six months ended June 30, 2023. The increase was primarily due to the increase in purchased media within digital marketing. PROFIT

Gross profit for the nine months ended September 30, 2024, increased by $201,422 to $451,347 compared to $249,925 for the nine months ended September 30, 2023. Gross profit margin for the nine months ended September 30, 2024, increased by 3% to 7% compared to 4% for the nine months ended September 30, 2023. The increase was due new customer contracts that had on boarding fees, the increase of use of the Company’s platform by customers for certain revenues, that fixed costs associated to them and a reduction in head count.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general and administrative ~~(SG&A)~~ expenses for the ~~six~~nine months ended ~~June~~September 30, 2024, ~~increased~~decrease by $3254,~~702~~132 to $34,~~371~~738,~~647~~477 compared to $34,~~367~~992,~~945~~607 for the ~~six~~nine months ended September ~~June~~ 30, 2023. ~~Due~~The decrease was primarily due to ~~the~~salaries ~~reduction~~of inbenefits ~~SG&A~~of ~~costs~~$499,081, inprofessional ~~the~~fees ~~second~~of ~~quarter~~$139,372, cloud-based tools of ~~fiscal~~$84,644, ~~2024~~bad debt recovery of $80,648, ~~SG&A~~offset ~~costs~~by ~~for~~an ~~the~~increase ~~year~~in ~~are~~advertising ~~essentially~~of $ 184032, outside services of $54,273, non-cash stock-based ~~unchanged~~compensation ~~from~~expense ~~the~~of ~~prior~~$127,781 ~~period~~and board fees of $85,500.

IMPAIRMENT OF INTANGIBLE ASSETS

During the ~~six~~nine months ended ~~June~~September 30, 2024, wethe Company recorded an impairment in certain intangible assets consisting of domain names in the amount $20,202. This was due to the Company not renewing its rights to the domain name. There was no comparable transaction in the prior period.

OTHER INCOME (EXPENSE)

~~Total~~Other ~~other~~ income (expense) for the nine ~~six~~ months ended ~~June~~September 30, 2024, was ~~$3,898,~~income ~~a change~~ of $~~438,919~~419 as compared to ~~other~~ income ~~(expense)~~ of ($435,~~021)~~026. ~~for~~The income from the ~~three~~ nine months ended ~~June~~ September 30, 2023. ~~The~~was ~~Company~~from ~~received~~a annon-recurring ~~ERC~~transaction ~~tax~~related ~~credit~~to in the ~~amount~~employee ofretention ~~$435,021~~credit ~~during~~that the ~~prior~~federal ~~period~~government ~~for~~provided ~~maintaining employment~~assistance ~~during~~to ~~the~~companies ~~COVID-19~~that ~~crisis;~~operated ~~there was no comparable transaction~~ during ~~the~~COVID-19 ~~current~~for ~~period~~eligible employees.

NET LOSS

The net loss for the ~~six months~~nine months ended ~~June~~September 30, 2024, and 2023 was $34,~~323~~310,~~834,~~811 anand ~~increase of~~ $~~550~~4,~~323 compared to the net loss of $2~~307,~~773~~656,~~511~~ ~~for the six months ended June 30, 2023~~respectively. The ~~increase in~~ net loss for ~~the~~both ~~period~~periods ~~was~~were ~~primarily~~based ~~due~~upon ~~to a decrease in Other Income from~~ the ~~effect of the ERC credit in~~factors ~~the~~as ~~prior~~described ~~period and an increase in SG&A expensed stock-based compensation~~above.

LIQUIDITY, ~~AND~~ CAPITAL RESOURCES AND GOING CONCERN

~~The~~Cash ~~Company had a net working capital deficit of $1,206,074 on June 30, 2024, compared to a net working capital deficit of $992,461 on December 31, 2023.~~Flows

~~Cash~~Below ~~flow~~is ~~used~~a insummary ~~operating activities~~of ~~was $2,144,941 for~~ the ~~six months ended June 30, 2024, compared to~~ Company cash ~~flow~~flows ~~used in operating~~ activities ~~of $3,245,612~~ for the ~~six~~nine months ended ~~June~~September 30, 2023. The increase in cash flow used in operating activities of $811,923 was primarily due to changes in the components of working capital: changes in accounts receivable balances resulted in an increase in cash of $92,896 during the six months ended June 30, 2024, ~~compared to ($632,632 during the prior period;~~ and ~~changes~~September ~~in deferred revenue resulted in an increase of cash in the amount of $248,013 during the six months ended June~~ 30, ~~2024, compared to 0 during the prior period.~~2023:

Cash flow provided by investing activities was $0 for the six months ended June 30, 2024, and 2023.

	Nine Months Ended September 30,
	2024			2023
Net cash provided by (used) in:
Net cash used in operating activities	$	(2,609,405	)	$	(4,943,454	)
Net cash used in investing activities		(863	)		-
Net cash provided by financing activities		2,499,999			5,599,427
Net (decrease) increase in cash and cash equivalents	$	(110,270	)	$	655,973

24Operating Activities

Cash flow ~~provided~~used byin ~~financing activities~~operating ~~was $2,499,999~~ activities for the ~~six~~nine months ended ~~June~~September 30, 2024, ~~compared~~was to$2,609,405 ~~cash~~was ~~flow~~primarily ~~provided~~due byto ~~financing~~the ~~activities~~net loss of $54,~~599~~310,~~427 for~~811, ~~the~~offset ~~six~~by ~~months~~changes ~~ended~~in ~~June~~operating activities ~~30,~~primarily ~~2023.~~from ~~During~~accounts ~~the~~receivable, ~~six~~accrued ~~months~~expenses, ~~ended~~deferred ~~June~~revenue ~~30,~~and ~~2024,~~customer ~~the~~deposits ~~Company~~of ~~received~~$278,7633 ~~proceeds~~and non-cash expenses of $21,~~500~~422,~~000~~643 ~~from~~Cash ~~the sale~~flow ofused ~~preferred~~in ~~stock,~~operating ~~compared~~activities towas $54,~~000~~943,~~000~~454 ~~from~~for ~~the~~nine ~~sale~~months ofended ~~preferred~~September ~~stock~~30, in2023 ~~the~~was ~~prior~~primarily ~~period.~~due ~~Also,~~to ~~during~~ the ~~prior period, the~~ ~~Company~~net ~~received~~loss ~~proceeds~~ of $~~599~~4,~~427~~307,656 ~~from~~and, ~~the~~offset ~~sale~~by ofchanges ~~common~~in ~~stock.~~operating ~~The~~actives ~~Company~~primarily ~~also~~from ~~paid~~accounts $1receivable, ~~for~~accrued ~~the~~expenses, ~~redemption~~deferred revenue and customer deposits of ~~preferred~~$(1,913,589) ~~stock~~and ~~during the~~non-cash ~~current~~expenses ~~period~~of $1,277,791.

~~Liquidity~~Investing is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.Activities

AsCash offlow ~~June~~used ~~30,~~in ~~2024,~~investing ~~the~~activities ~~Company~~for ~~had~~the annine ~~equity~~months ~~line~~ended ~~financing~~September ~~relationship~~30, ~~with~~2024 ~~one~~was ~~investor.~~y ~~During~~$863 ~~the~~which ~~current~~was ~~period,~~for the ~~investor provides short-term financing under a stock~~ purchase ~~arrangement~~of ~~disclosed~~fixed ~~in footnote 6~~assets. ~~The~~There ~~Company~~was ~~does~~no ~~not~~investing ~~have~~activities for ~~any~~the ~~long-term~~nine ~~sources~~months ofended ~~liquidity.~~September ~~As of June~~ 30, ~~2024,~~ ~~there were no unused sources of liquidity, nor were there any commitments of material capital expenditures~~2023.

The Company has negative monthly cash flows from operations of approximately $200,000. The Company’s current cash is not sufficient to sustain the Company’s operations for approximately 12 months without additional borrowings or further sales of stock. To satisfy cash needs, the Company relies on the sale of capital stock or can introduce borrowing mechanisms to fund operations, as discussed above.

The consolidated financial statements of the Company have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. Management believes that our current cash flow will sustain our operations and obligations as they become due, additionally will allow the development of our core business operations. Furthermore, the Company anticipates that it will raise additional capital through investments from our existing shareholders, prospective new investors and future revenue generated by our operations.

Any additional capital we may raise through the sale of equity or equity-backed securities may dilute current stockholders’ ownership percentages and could also result in a decrease in the fair market value of our equity securities. The terms of the securities issued by us in future capital transactions may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants or other derivative securities which may have a further dilutive effect.

Furthermore, any additional debt or equity or other financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business. Further, we may not be able to continue operations if we do not generate sufficient revenues from operations.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our reported financial results.

Financing Activities

Cash flow provided by financing activities for the nine months ended September 30, 2024 was $2,499,999 which was from the proceeds of $2,500,000 from the sale of preferred stock. Cash flow provided by financing activities for the nine months ended September 30, 2023 as $5,599,400. This was from the proceeds from the issuance of preferred stock of $5,000,000 and proceeds from the issuance of common stock of $599,427.

As of September 30, 2024, the Company had cash of $630 and a working capital deficit of $1,882,197. During the nine months ended September 30, 2024, the Company used $2,609,405 of cash in operations and incurred a net loss of $4,310,811, resulting in an accumulated deficit of ay $64,435,843.

Any additional capital that the Company may raise through the sale of equity or equity-backed securities may dilute current stockholders’ ownership percentages and could also result in a decrease in the fair market value of AiAdvertising equity securities. The terms of the securities issued by the Company in future capital transactions may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants or other derivative securities which may have a further dilutive effect. Furthermore, any additional debt or equity or other financing that we may need may not be available on terms favorable to us, or at all. If we are unable to obtain additional capital, we may have to curtail our growth plans or cut back on existing business. Further, we may not be able to continue operations if AiAdvertising does not generate sufficient revenues from operations. The Company may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. The Company may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our reported financial results.

The accompanying Consolidated Financial Statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying Consolidated Financial Statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company historically does not generate significant revenues, and has negative cash flows from operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, raising additional capital. There is no assurance that the Company can obtain capital on terms that are acceptable, or at all, to the Company.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective due to material weaknesses.

Based on that evaluation, our management concluded that, due to material adjusting entries related to stock issuances, as of June 30, 2024, our disclosure controls and procedures were ineffective.

Changes in Internal Controls over Financial Reporting

There ~~have~~were ~~been~~ no changes in ~~the Company’s~~ our internal control over financial reporting that occurred during the ~~Company’s~~three ~~last~~months ~~fiscal quarter~~ ended ~~June~~ September 30, 2024, that ~~have~~ materially affected, or are reasonably likely to materially affect, the Company’s internal ~~control~~controls over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

2627

PART II. - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The Company may be involved in legal actions and claims arising in the ordinary course of business from time to time in the future. However, at this time there are no current legal proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is the subject.

Item 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in “Risk Factors” in our Form 10-K filed with the SEC on September 12, 2024.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangement

During the ~~six~~nine months ended ~~June~~September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. EXHIBITS

(a)

Exhibits

EXHIBIT NO.		DESCRIPTION
31.1		Section 302 Certification*
31.1 *		Section 302 Certification*
31.2		Section 302 Certification*
31.2 *		Section 302 Certification**
32.1		Section 906 Certification**
32.1 **		Section 906 Certification**
32.2		Section 906 Certification **
32.2 **		Section 906 Certification **
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed herewith.

Furnished herewith.

2728

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AIADVERTISING, INC.
	(Registrant)
Dated: November 12, 2024	By:	/s/ Gerard Hug
Dated: December 12, 2024	By:	/s/ Gerard Hug
		Gerard Hug Chief Executive Officer (Principal Executive Officer)
		/s/ John C. Small
		/s/ Douglas Beck, CPA
		John Small Chief Financial Officer (Principal Financial and Accounting Officer)
		Douglas Beck, CPA Chief Financial Officer (Principal Financial and Accounting Officer)

2829

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