AUDDIA INC

Previous wording

Auddia has also developed a differentiated podcasting capability with ad-reduction features and also provides a unique suite of tools that helps podcasters create additional digital content for their podcast episodes as well as plan their episodes, build their brand, and monetize their content with new content distribution channels. This podcasting feature also gives users the ability to go deeper into the stories through supplemental, digital content, and eventually comment and contribute their own content to episode feeds. The combination of AM/FM streaming and podcasting, with Auddia’s unique, technology-driven differentiators, addresses large and rapidly growing audiences.

Current wording

Auddia has also developed a differentiated podcasting capability with ad-reduction features and also provides a unique suite of tools that helps podcasters create additional digital content for their podcast episodes as well as plan their episodes, build their brand, and monetize their content with new content distribution channels. This podcasting feature also gives users the ability to go deeper into the stories through supplemental, digital content, and eventually comment and contribute their own content to episode feeds.

Previous wording

The Company has developed its AI platform on top of Google’s TensorFlow open-source library that is being “taught” to know the difference between all types of audio content on the radio. For instance, the platform recognizes the difference between a commercial and a song and is learning the differences between all other content to include weather reports, traffic, news, sports, DJ conversation, etc. Not only does the technology learn the differences between the various types of audio segments, but it also identifies the beginning and end of each piece of content.

Current wording

We have developed our AI platform on top of Google’s TensorFlow open-source library that is being “taught” to know the difference between all types of audio content on the radio. For instance, the platform recognizes the difference between a commercial and a song and is learning the differences between all other content to include weather reports, traffic, news, sports, DJ conversation, etc. Not only does the technology learn the differences between the various types of audio segments, but it also identifies the beginning and end of each piece of content.

Previous wording

The Company is leveraging this technology platform within its premium AM/FM radio listening experience through the faidr App. The faidr App is intended to be downloaded by consumers who will pay a subscription fee in order to listen to any streaming AM/FM radio station and podcasts, all with commercial interruptions removed from the listening experience, in addition to the faidrRadio exclusive content offerings. Advanced features will allow consumers to skip any content heard on the station and request audio content on-demand. We believe the faidr App represents a significant differentiated audio streaming product, or Superapp, that will be the first to come to market since the emergence of popular streaming music apps such as Pandora, Spotify, Apple Music, Amazon Music, etc. We believe that the most significant point of differentiation is that in addition to ad-free AM/FM streaming and ad-reduced podcasts, the faidr App is intended to deliver non-music content that includes local sports, news, weather, traffic and the discovery of new music alongside exclusive programming. No other audio streaming app available today, including category leaders like TuneIn, iHeart, and Audacy, can compete with faidr’s full product offerings.

Current wording

We are leveraging this technology platform within our premium AM/FM radio listening experience through the faidr App. The faidr App is intended to be downloaded by consumers who will pay a subscription fee in order to listen to any streaming AM/FM radio station and podcasts, all with commercial interruptions removed from the listening experience, in addition to the faidrRadio exclusive content offerings. Advanced features will allow consumers to skip any content heard on the station and request audio content on-demand. We believe the faidr App represents a significant differentiated audio streaming product, or Superapp, that will be the first to come to market since the emergence of popular streaming music apps such as Pandora, Spotify, Apple Music, Amazon Music, etc. We believe that the most significant point of differentiation is that in addition to ad-free AM/FM streaming and ad-reduced podcasts, the faidr App is intended to deliver non-music content that includes local sports, news, weather, traffic and the discovery of new music alongside exclusive programming. No other audio streaming app available today, including category leaders like TuneIn, iHeart, and Audacy, can compete with faidr’s full product offerings.

Previous wording

The Company launched an MVP version of faidr through several consumer trials in 2021 to measure consumer interest and engagement with the App. The full app launched on February 15, 2022, and included all major U.S. radio stations in the US. In February 2023, we added faidrRadio, our exclusive content offerings, to the app. Podcasts (standard) were added to the app for the iOS version before the end of Q1 2023 as planned and added to the Android app in May of 2023. Podcast functionality will continue to be enhanced through 2024, including the deployment of the Company’s ad-reduction technology.

Current wording

We launched an MVP version of faidr through several consumer trials in 2021 to measure consumer interest and engagement with the App. The full app launched on February 15, 2022, and included all major U.S. radio stations in the US. In February 2023, we added faidrRadio, our exclusive content offerings, to the app. Podcasts were added to the app for the iOS version before the end of Q1 2023 as planned and added to the Android app in May of 2023.

Previous wording

The Company also developed a testbed differentiated podcasting capability called Vodacast, which leveraged technologies and proven product concepts to differentiate its podcasts offering from other competitors in the radio-streaming product category.

Current wording

We also developed a testbed differentiated podcasting capability called Vodacast, which leveraged technologies and proven product concepts to differentiate its podcasts offering from other competitors in the radio-streaming product category.

Previous wording

With podcasting growing and predicted to grow at a rapid rate, the Vodacast podcast platform was conceptualized to fill a void in the emerging audio media space. The platform was built to become the preferred podcasting solution for podcasters by enabling them to deliver digital content feeds that match the audio of their podcast episodes, and by enabling podcasters to make additional revenue from new digital advertising channels, subscription channels, on-demand fees for exclusive content, and through direct donations from their listeners. Throughout 2023 and early 2024, Auddia has been migrating their podcasting capabilities into the flagship faidr app with the intention to sunset the Vodacast platform and instead bring the advanced podcasting functionality that was found on Vodacast into faidr as part of the overall strategy to build a single audio Superapp. This includes Auddia’s new podcast ad-reduction technology.

Current wording

With podcasting growing and predicted to grow at a rapid rate, the Vodacast podcast platform was conceptualized to fill a void in the emerging audio media space. The platform was built to become the preferred podcasting solution for podcasters by enabling them to deliver digital content feeds that match the audio of their podcast episodes, and by enabling podcasters to make additional revenue from new digital advertising channels, subscription channels, on-demand fees for exclusive content, and through direct donations from their listeners.

Previous wording

We have funded our operations with proceeds from the February 2021 IPO, Series A warrants exercised in July 2021 and common share issuance during June of 2023. We obtained debt financing through a related party during November 2022 and April 2023. We sold common shares during April 2023, June 2023, and during the first and second quarters of 2024 pursuant to our equity line facility. Lastly, we entered into a securities purchase agreement with accredited investors for convertible preferred stock and warrants financing. Since our inception, we have incurred significant operating losses. As of June 30, 2024, we had an accumulated deficit of $85,054,083. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and commercialization of one or more of our Apps. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

Current wording

We have funded our operations with proceeds from the February 2021 IPO, Series A warrants exercised in July 2021 and common share issuance during June of 2023. We obtained debt financing through a related party during November 2022 and April 2023. We sold common shares during April 2023, June 2023, and during the first and second quarters of 2024 pursuant to our equity line facility. Lastly, we entered into a securities purchase agreement with accredited investors for convertible preferred stock and warrants financing. Since our inception, we have incurred significant operating losses. As of September 30, 2024, we had an accumulated deficit of $87,003,511. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and commercialization of one or more of our Apps. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $1,882,205. The Company secured approximately $7.1 million in additional financing during 2024. We will need additional funding to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. However, if we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $3,773,827. We secured approximately $10.4 million in additional financing during 2024. We will need additional funding to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. However, if we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts.

Previous wording

To accelerate user acquisition, revenue, and cash flow, the Company has explored numerous potential acquisition targets of AM/FM streaming aggregators over the past year and a half and continues to explore new opportunities.

Current wording

To accelerate user acquisition, revenue, and cash flow, we have explored numerous potential acquisition targets of AM/FM streaming aggregators over the past year and a half and will continue to explore new opportunities.

Previous wording

We incurred $370,228 in costs related to evaluating potential acquisitions during the six months ended June 30, 2024.

Current wording

We incurred $426,572 in costs related to evaluating potential acquisitions during the nine months ended September 30, 2024.

Previous wording

The Nasdaq listing rules require listed securities to maintain a minimum bid price of $1.00 per share. As previously reported in our Current Report on Form 8-K filed on November 28, 2023, we received a written notice from Nasdaq indicating that the Company was not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing. As a result, the Nasdaq staff determined to delist the Company’s Common Stock from Nasdaq, unless the Company timely requests an appeal of the Staff’s determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series. Our hearing with the Panel occurred on January 18, 2024.

Current wording

The Nasdaq listing rules require listed securities to maintain a minimum bid price of $1.00 per share. On October 16, 2024, we received a written notice from Nasdaq indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing. The Bid Price Notice does not result in the immediate delisting of our common stock from the Nasdaq Capital Market. The Bid Price Notice indicated that we have 180 calendar days (or until April 14, 2025) in which to regain compliance.

Previous wording

Direct cost of services increased $5,189 or 11.5% from $45,038 for the three months ended June 30, 2023 compared to $50,227 for the three months ended June 30, 2024. This increase was primarily the result of an increase in hosting costs and music service costs.

Current wording

Direct cost of services increased $11,446 or 26.3% from $43,470 for the three months ended September 30, 2023 compared to $54,916 for the three months ended September 30, 2024. This increase was primarily the result of an increase in hosting costs and music service costs.

Previous wording

Sales and marketing expenses decreased by $85,616 or (19.1%) from 448,879 for the six months ended June 30, 2023 to $363,263 for the six months ended June 30, 2024, which was primarily attributed to reduced marketing promotion costs associated with the national launch of the faidr app. We expect our sales and marketing expenses to fluctuate period by period as we release new upgrades and enhancements within our Apps and look to generate revenue through customer acquisition, retention, and subscription conversion.

Current wording

Sales and marketing expenses decreased by $33,847 or (10.7%) from $316,297 for the three months ended September 30, 2023 to $282,450 for the three months ended September 30, 2024, which was primarily attributed to reduced marketing promotion costs associated with the national launch of the faidr app as the quarter was focused on ASO optimization. We expect our sales and marketing expenses to fluctuate period by period as we release new upgrades and enhancements within our faidr App and look to generate revenue through customer acquisition, retention, and subscription conversion.

Previous wording

Depreciation and amortization expenses increased by $50,764 or 11.5% from $442,618 for the three months ended June 30, 2023 compared to $493,382 for the three months ended June 30, 2024. The increase is entirely related to the increased amortization of our faidr and podcasting Apps.

Current wording

Depreciation and amortization expenses increased by $30,794 or 6.6% from $465,166 for the three months ended September 30, 2023 compared to $495,960 for the three months ended September 30, 2024. The increase is entirely related to the increased amortization of our faidr and podcasting Apps.

Previous wording

Total other expenses increased by $110,463 or 20.5% from $538,572 for the three months ended June 30, 2023 to $649,035 for the three months ended June 30, 2024. Interest expense decreased by $521,925 due to the repayment of notes payable to related party in April 2024. Interest expense was offset by $632,388 due to the change in the fair value of the notes payable converted to equity.

Current wording

Total other expenses decreased by $285,342 or (99.5%) from $286,920 for the three months ended September 30, 2023 to $1,578 for the three months ended September 30, 2024. Interest expense decreased by $285,342 due to the repayment of notes payable to related party in April 2024.

Previous wording

Total revenues for the six months ended June 30, 2024 and 2023 were $0 as we continue to develop and enhance our faidr and podcasting Apps to establish new revenue streams.

Current wording

Total revenues for the nine months ended September 30, 2024 and 2023 were $0 as we continue to develop and enhance our faidr and podcasting Apps to establish new revenue streams.

Previous wording

Direct cost of services increased $11,061 or 12.7% from $87,339 for the six months ended June 30, 2023 compared to $98,400 for the six months ended June 30, 2024. This increase was primarily the result of an increase in hosting costs and data subscription fees.

Current wording

Direct cost of services increased $22,507 or 17.2% from $130,809 for the nine months ended September 30, 2023 compared to $153,316 for the nine months ended September 30, 2024. This increase was primarily the result of an increase in hosting costs and data subscription fees.

Previous wording

Sales and marketing expenses decreased by $6,892 or (3.1%) from $223,760 for the three months ended June 30, 2023 to $216,868 for the three months ended June 30, 2024, which was primarily attributed to reduced marketing promotion costs associated with the national launch of the faidr app. We expect our sales and marketing expenses to fluctuate period by period as we release new upgrades and enhancements within our Apps and look to generate revenue through customer acquisition, retention, and subscription conversion.

Current wording

Sales and marketing expenses decreased by $119,463 or (15.6%) from $765,176 for the nine months ended September 30, 2023 to $645,713 for the nine months ended September 30, 2024, which was primarily attributed to reduced marketing promotion costs associated with the national launch of the faidr app. We expect our sales and marketing expenses to fluctuate period by period as we release new upgrades and enhancements within our Apps and look to generate revenue through customer acquisition, retention, and subscription conversion.

Previous wording

Research and development expenses decreased by $20,775 or (11.5%) from $180,363 for the three months ended June 30, 2023 to $159,588 for the three months ended June 30, 2024, which was primarily due to lower salary, consulting and content creator fees.

Current wording

Research and development expenses decreased by $59,442 or (9.6%) from $617,622 for the nine months ended September 30, 2023 to $558,180 for the nine months ended September 30, 2024, which was primarily due to lower consulting and content creator fees.

Previous wording

General and administrative expenses increased by $125,788 or 6.9% from $1,819,336 for the six months ended June 30, 2023 compared to $1,945,124 for the six months ended June 30, 2024. The increase was primarily driven by an increase in salary expense and professional fees to support compliance requirements related to potential acquisitions, partially offset by lower stock compensation expense.

Current wording

General and administrative expenses increased by $229,732 or 8.8% from $2,596,831 for the nine months ended September 30, 2023 compared to $2,826,563 for the nine months ended September 30, 2024. The increase was primarily driven by an increase in salary expense and professional fees to support compliance requirements related to potential acquisitions and equity offerings, partially offset by lower stock compensation expense.

Previous wording

Depreciation and amortization expenses increased by $91,475 or 10.3% from $885,653 for the six months ended June 30, 2023 compared to $977,128 for the six months ended June 30, 2024. The increase is entirely related to the increased amortization of our faidr and podcasting Apps.

Current wording

Depreciation and amortization expenses increased by $122,268 or 9.1% from $1,350,820 for the nine months ended September 30, 2023 compared to $1,473,088 for the nine months ended September 30, 2024. The increase is entirely related to the increased amortization of our faidr and podcasting Apps.

Previous wording

Total other expenses decreased by $44,735 or 5.3% from $846,478 for the six months ended June 30, 2023 to $801,743 for the six months ended June 30, 2024. Interest expense decreased by $677,123 due to the repayment of notes payable to related party in April 2024. Interest expense was offset by $632,388 due to the change in the fair value of the notes payable converted to equity.

Current wording

Total other expenses decreased by $330,077 or (29.1%) from $1,133,398 for the nine months ended September 30, 2023 to $803,321 for the nine months ended September 30, 2024. Interest expense decreased by $962,465 due to the repayment of notes payable to related party in April 2024. Interest expense was offset by $632,388 due to the change in the fair value of the notes payable converted to equity.

Previous wording

We have incurred operating losses since our inception and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our faidr and podcasting Apps. As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $1,882,205 and $804,556, respectively. We have working capital in the amount of approximately $1.7 million as of June 30, 2024. We anticipate that operating losses and net cash used in operating activities will increase over the next 12 months as we continue to develop and market our products. We secured $7.1 million of additional financing in 2024, which enabled us to pay down $2.75 million in connection with the Secured Bridge Notes and will only be sufficient to fund our current operating plans into the fourth quarter of 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong. We will need additional funding to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts.

Current wording

We have incurred operating losses since our inception and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our faidr and podcasting Apps. As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $3,773,827 and $804,556, respectively. We have working capital in the amount of approximately $3.4 million as of September 30, 2024. We anticipate that operating losses and net cash used in operating activities will increase over the next 12 months as we continue to develop and market our products. We secured $10.4 million of additional financing in 2024, which enabled us to pay down $2.75 million in connection with the Secured Bridge Notes and will only be sufficient to fund our current operating plans into the first quarter of 2025. The Company has based these estimates, however, on assumptions that may prove to be wrong. We will need additional funding to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts.

Previous wording

Through June 30, 2024, we have sold 1,940,000 shares to White Lion for total net proceeds of $4,852,508. We currently have effective registration statements that registers for resale by White Lion up to 5,165,263 shares of common stock that we may issue to White Lion under the Equity Line Purchase Agreement. After White Lion has acquired shares under the Equity Line Purchase Agreement, it may sell all, some or none of those shares. Sales to White Lion by us pursuant to the Equity Line Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock.

Current wording

Through September 30, 2024, we have sold 4,815,263 shares to White Lion for total proceeds of $8,176,048. We currently have effective registration statements that registers for resale by White Lion up to 2,200,090 remaining shares of common stock that we may issue to White Lion under the Equity Line Purchase Agreement. After White Lion has acquired shares under the Equity Line Purchase Agreement, it may sell all, some or none of those shares. Sales to White Lion by us pursuant to the Equity Line Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock.

Previous wording

The following table summarizes the statements of cash flows for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes the statements of cash flows for the nine months ended September 30, 2024 and 2023:

Previous wording

Cash used in operating activities for the six months ended June 30, 2024 was ($2,633,821), primarily resulting from our net loss of ($4,510,753) and change in working capital of $45,275, offset by non-cash charges of $1,922,207 related to depreciation and amortization, share based compensation expense, and the change in fair value of warrants. Cash used in operating activities for both periods consisted of personnel-related expenditures, marketing and promotion costs, and public company administrative support costs such as legal and other professional support services.

Current wording

Cash used in operating activities for the nine months ended September 30, 2024 was ($3,803,324), primarily resulting from our net loss of ($6,460,181) and change in working capital of $112,262, offset by non-cash charges of $2,544,594 related to depreciation and amortization, share based compensation expense, and the change in fair value of warrants. Cash used in operating activities for both periods consisted of personnel-related expenditures, marketing and promotion costs, and public company administrative support costs such as legal and other professional support services.

Previous wording

Cash used in operating activities for the six months ended June 30, 2023, was ($2,214,729), primarily resulting from our net loss of ($4,478,174) and change in working capital of $99,309 related to an increase in accounts payable and accrued liabilities, offset by non-cash charges of $2,164,136 related to depreciation and amortization, share based compensation expense, and finance charges associated with the debt issuance costs of the Secured Bridge Notes. Cash used in operating activities for both periods consisted of personnel-related expenditures, marketing and promotion costs, and public company administrative support costs such as legal and other professional support services.

Current wording

Cash used in operating activities for the nine months ended September 30, 2023, was ($3,404,954), primarily resulting from our net loss of ($6,594,656) and change in working capital of $188,517 related to an increase in accounts payable and accrued liabilities, offset by non-cash charges of $3,001,184 related to depreciation and amortization, share based compensation expense, and finance charges associated with the debt issuance costs of the Secured Bridge Notes. Cash used in operating activities for both periods consisted of personnel-related expenditures, marketing and promotion costs, and public company administrative support costs such as legal and other professional support services.

Previous wording

Cash flows used in investing activities for the six months ended June 30, 2024 were ($537,120), consisting of the capitalization of software development expenses and purchase of computer equipment.

Current wording

Cash used in investing activities for the nine months ended September 30, 2024 was ($799,535), consisting of the capitalization of software development expenses and purchase of computer equipment.

Previous wording

Cash flows used in investing activities for the six months ended June 30, 2023 were ($529,503), consisting entirely of capitalization of software development expenses.

Current wording

Cash used in investing activities for the nine months ended September 30, 2023 was ($743,208), consisting entirely of capitalization of software development expenses.

Previous wording

Cash flows generated in financing activities for the six months ended June 30, 2024 were $4,248,590, which consisted of cash proceeds from the issuance of common shares of $4,852,508 and cash proceeds from the issuance of preferred shares of $2,238,575. This was partially offset by the repayment of the note payable to related party of $2,750,000, payment of offering costs of $72,807 and net settlement of share-based compensation liability of $19,686.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2024 was $7,572,130, which consisted of cash proceeds from the issuance of common shares of $8,176,048 and cash proceeds from the issuance of preferred shares of $2,238,575. This was partially offset by the repayment of the note payable to related party of $2,750,000, payment of offering costs of $72,807 and net settlement of share-based compensation liability of $19,686.

Previous wording

Cash flows generated in financing activities for the six months ended June 30, 2023, were $4,687,941 and related primarily to cash proceeds from the issuance of common shares of $4,016,521 and proceeds from related party debt of $750,000.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2023 was $4,686,406 and related primarily to cash proceeds from the issuance of common shares of $4,016,521 and proceeds from related party debt of $750,000.

Previous wording

We historically have incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $85,054,083 and $80,543,330 as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $1,882,205 and $804,556, respectively. Our cash is comprised primarily of demand deposit accounts and money market funds. We secured $7.1 million of additional financing in 2024, which enabled us to pay down $2.75 million in connection with the Secured Bridge Notes and will only be sufficient to fund our current operating plans into the fourth quarter of 2024. We have based these estimates, however, on assumptions that may prove to be wrong. We will need additional funding to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts.

Current wording

We historically have incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $87,003,511 and $80,543,330 as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $3,773,827 and $804,556, respectively. Our cash is comprised primarily of demand deposit accounts and money market funds. We secured $10.4 million of additional financing in 2024, which enabled us to pay down $2.75 million in connection with the Secured Bridge Notes and will only be sufficient to fund our current operating plans into the first quarter of 2025. We have based these estimates, however, on assumptions that may prove to be wrong. We will need additional funding to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts.