KOGETO, INC.

In addition to the warrants, at the start of each six-month period during the twenty-four month term of this agreement, we agreed to issue to Baytree 100,000 shares of our common stock. If the current market value of these shares is less than $75,000, we will issue to Baytree such number of shares of our common stock necessary to make the value of this fee equal to $75,000 (the current market value for our common stock would be calculated as the average closing price for our common stock for the 30 trading days prior to the payment of this fee). On July 17, 2014, we issued 384,620 shares of our common stock pursuant to this provision of the financial advisory agreement with Baytree for the six-month periods ended July 6, 2014 and January 6, 2015. For the six-month period ended July 6, 2014, we issued 267,858 shares of our common stock based on the agreed share price of $0.28 or $75,000. For the six-month period ended January 6, 2015, we issued 116,762 shares of our common stock in advance based on the current market value calculation per the agreement of $0.64 per share but these shares were valued for accounting purposes at $0.28 per share, based on the purchase price of $0.28 per share for our latest private placements due to the limited trading in our common stock, or $32,693. We recorded $19,459 and $90,292 of expense to financial advisory fees related to this provision during the three and nine months ended September 30, 2014, respectively.

On August 27, 2014, we completed a closing of a private placement to six accredited investors of 1,575,000 shares of our Common Stock at a purchase price of $0.28 per share, for gross proceeds of $441,000. The gross proceeds of the private placement included the conversion of $150,000 in bridge financing. The investors in the private placement also received five-year warrants to purchase up to 315,000 shares of our Common Stock, at an exercise price of $0.32 per share. As part of the conversion of $150,000 in bridge financing, the investor was issued an additional five-year warrant to purchase up to an aggregate of 100,000 shares of our Common Stock at an exercise price of $0.32, valued at $0.17 per share or $17,300 using the Black-Scholes model and were included in interest expense in the three months ended September 31, 2014. The placement agents in the private placement received cash commissions of $35,280 and five-year warrants with a cashless exercise provision to purchase 151,200 shares of our Common Stock at $0.32 per share. The net proceeds from the private placement, following the payment of offering-related expenses, are being used to develop and launch our next round of products, for working capital and other general corporate purposes.

We have recently commenced providing video production services to third parties utilizing our 360º video capture systems, software and web services. Although these projects produced only a small amount of revenue, they opened the door for us to provide similar services to other companies. Toward this end, we have recently partnered with Macronym, a multi-media agency, studio and technology integrator in the Los Angeles area, to pursue larger scale engagements like this with established media and advertising companies. We intend to expand this high margin, low cost aspect of our business as we invest in further developing our technology.

For the three months ended September 30, 2014, interest expense decreased $20,089 to $21,427 from $41,516 during the same period in 2013 due to the Senior Secured 10% Convertible Notes being converted or repaid by the first quarter of 2014 and of the $750,000 of Secured 10% Bridge Notes that were issued in the third quarter of 2013, $450,000 of Secured 10% Bridge Notes were cancelled and included in the private placement on December 31, 2013 and $300,000 of Secured 10% Bridge Notes were converted or repaid in the third quarter of 2014. Also included in interest expense in the three months ended September 30, 2014 is the value of additional warrants issued as part of the conversion of $150,000 in bridge financing on August 27, 2014 valued at $0.17 per share or $17,300 using the Black-Scholes model.

Net cash provided by investing activities amounted to $89,797 for the nine months ended September 30, 2014, compared to net cash used in investing activities of approximately $170,995 for the nine months ended September 30, 2013. The net cash provided by investing activities for the nine months ended September 30, 2014 included the cash provided by the decrease in restricted cash of $126,075 in the first quarter of 2014 and the cash used for the purchase of property and equipment of $36,278, which primarily consists of the purchase of molds. The cash used in investing activities for the nine months ended September 30, 2013 included the cash used of $165,900 for externally developed software capitalized in 2013 and the cash used of $5,095 for the purchase of property and equipment.