AUDDIA INC.

For the Years Ended December 31, 2025 and 2024

Note 1 –Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

Auddia Inc., (the “Company”, “Auddia”, “we”, “our”) is a technology company that is reinventing how consumers engage with audio through the development of a proprietary AI platform for audio and innovative technologies for podcasts. The Company is incorporated in Delaware and headquartered in Colorado.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Reverse Stock Splits

The reverse stock splits did not change the authorized number of shares of the Company’s common stock. No fractional shares were issued and any fractional shares resulting from the reverse stock splits were rounded up to the nearest whole share.

The reverse stock splits applied to the Company’s outstanding warrants, stock options and restricted stock units. The number of shares of common stock into which these outstanding securities are convertible or exercisable were adjusted proportionately as a result of the reverse stock splits. The exercise prices of any outstanding warrants or stock options were also proportionately adjusted in accordance with the terms of those securities and the Company’s equity incentive plans.

As a result of the reverse stock splits, unless described otherwise, all references to common stock, share data, per share data and related information contained in these financial statements have been retroactively adjusted to reflect the effect of the reverse stock splits for all periods presented. In addition, any fractional shares that would otherwise be issued as a result of the reverse stock splits were rounded up to the nearest whole share. Further, the number of shares issuable and exercise prices of stock options and warrants have been retroactively adjusted in these financial statements for all periods presented to reflect the reverse stock splits.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

The financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to valuation of capital stock, warrants and options to purchase shares of the Company’s common stock, and the estimated recoverability and amortization period for capitalized software development costs. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Risks and Uncertainties

The Company is subject to various risks and uncertainties frequently encountered by companies in the early stages of development. Such risks and uncertainties include, but are not limited to, its limited operating history, competition from other companies, limited access to additional funds, dependence on key personnel, and management of potential rapid growth. To address these risks, the Company must, among other things, develop its customer base; implement and successfully execute its business and marketing strategy; develop follow-on products; provide superior customer service; and attract, retain, and motivate qualified personnel. There can be no guarantee that the Company will be successful in addressing these or other such risks.

Cash and Cash Equivalents

The Company had cash on hand of $1,052,990 and $2,703,391 as of December 31, 2025 and 2024, respectively.

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company had cash equivalents of $2,133,995 and $2,927 as of December 31, 2025 and 2024, respectively.

The Company maintains cash deposits at several financial institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s cash balance may at times exceed these limits. As of December 31, 2025 and 2024, the Company had approximately $2.9 million and $2.2 million, respectively, in excess of federally insured limits. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets, ranging fromtwo to five years.

Software Development Costs

The Company accounts for costs incurred in the development of computer software as software research and development costs until the preliminary project stage is completed, management has committed to funding the project, and completion and use of the software for its intended purpose is probable.

The Company ceases capitalization of development costs once the software has been substantially completed and is available for its intended use. Software development costs are amortized over a useful life estimated by the Company’s management of three years. Costs associated with significant upgrades and enhancements that result in additional functionality are capitalized. Capitalized costs are subject to an ongoing assessment of recoverability based on anticipated future revenues and changes in software technologies.

Unamortized capitalized software development costs determined to be in excess of anticipated future net revenues are considered impaired and expensed during the period of such determination. Software development costs of $852,171 and $992,147 were capitalized for the years ended December 31, 2025 and 2024, respectively. Amortization of capitalized software development costs were $1,551,845 and $2,031,852 for the years ended December 31, 2025 and 2024, respectively, and are included in depreciation and amortization expense.

Long-Lived Assets

The Company reviews its tangible and limited lived intangible long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. If a potential impairment is indicated, the Company compares the carrying amount of the asset to the undiscounted future cash flows associated with the asset. In the event the future cash flows are less than their carrying value, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. The Company determined long-lived assets werenot impaired at December 31, 2025 and 2024.

Income Taxes

The Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value when, in the opinion of management, it is more likely than not that some portion or all of the deferred income tax assets will not be realized in the future.

The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a part of income tax expense.

Prior to the Company’s conversion to a Delaware corporation in February 2021, the Company was a limited liability company and had elected to be treated as a pass-through entity for income tax purposes. Accordingly, taxable income and losses of the Company were reported on the income tax returns of its members, and no provision for federal income taxes have been recorded in the accompanying financial statements. Had the Company been a taxable entity, no provision for income taxes would have been recorded as the Company has sustained losses since inception.

Right of Use Assets and Lease Liabilities

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The standard requires lessees to recognize almost all leases on the balance sheet as a Right-of-use (“ROU”) asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard became effective for the Company beginning January 1, 2019. The Company adopted ASC 842 using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842.

Under ASC 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As the Company’s lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in determining the present value of lease payments.

Operating leases are included in operating lease right of use asset and operating lease liabilities, current and non-current, on the Company’s accompanying balance sheets.

Revenue Recognition

Revenue will be measured according to Accounting Standards Codification (“ASC”) 606, Revenue – Revenue from Contracts with Customers, and will be recognized based on consideration specified in a contract with a customer and will exclude any sales incentives and amounts collected on behalf of third parties. The Company will recognize revenue when it satisfies a performance obligation by transferring control over a service or product to a customer. To achieve this core principle, the Company applies the following five steps: (*1) Identify the contract with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performance obligation.*The Company will report revenues net of any tax assessed by a governmental authority that is both imposed on, and concurrent with, a specific revenue-producing transaction between a seller and a customer in the accompanying statements of operations. Collected taxes, if applicable, will be recorded within other current liabilities until remitted to the relevant taxing authority.

Subscriber revenue will consist primarily of subscription fees and other ancillary subscription-based revenues. Revenue will be recognized on a straight-line basis when the performance obligations to provide each service for the period have been satisfied, which is over time as our subscription services are continuously available and can be consumed by customers at any time.

Customers may pay for the services in advance of the performance obligation and therefore these prepayments will be recorded as deferred revenue. The deferred revenue will be recognized as revenue in the accompanying statements of operations as the services are provided.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising expense for the years ended December 31, 2025 and 2024 was $218,409 and $355,303, respectively.

Share-Based Compensation

The Company accounts for share-based compensation arrangements with employees, directors, and consultants and recognizes the compensation expense for share-based awards based on the estimated fair value of the awards on the date of grant.

Compensation expense for all share-based awards is based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period). The Company records share-based compensation expense related to non-employees over the related service periods.

Net Loss per Share

Basic loss per common share is calculated based on the weighted-average number of common shares outstanding in accordance with FASB ASC Topic 260,Earnings per Share. Diluted net loss per share is calculated based on the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares. When the Company reports a net loss, the calculation of diluted net loss per share excludes potential common shares as the effect would be anti-dilutive. Potential common shares are composed of shares of common issuable upon the exercise of options and warrants.

Liquidity, Capital Resources and Going Concern

As of December 31, 2025, the Company had cash and cash equivalents of $3,186,985. The Company will require additional funding to complete development of its full product line and to scale products that have demonstrated market fit. During 2025, the Company raised $7.1 million in additional capital. Subsequent to year-end, the Company raised an additional $0.9 million through March 4, 2026. These proceeds are expected to fund operations only into the second quarter of 2026.

In February 2026, the Company entered into a merger agreement with Thramann Holdings, pursuant to which Thramann Holdings will become part of the combined company following the closing of the transaction. While the merger is expected to strengthen the Company’s long-term strategic and operational position, the transaction is not expected to provide sufficient near-term liquidity to fund the Company’s operating requirements for the twelve months following the issuance of these financial statements. The Company will continue to require additional capital prior to and following the merger closing to support ongoing operations and product development.

Management is actively pursuing additional financing arrangements to address these liquidity needs. If the Company is unable to raise capital when required or on acceptable terms, it may be forced to delay, reduce, or eliminate technology development and commercialization efforts.

As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, substantial doubt exists regarding the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. Management’s plans to mitigate these conditions include the potential use of the White Lion equity line of credit, additional future financing agreements, and the anticipated strategic benefits of the merger with Thramann Holdings. However, there can be no assurance that these plans will be successful.

These financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern. Based on current projections, the Company’s existing cash resources are expected to be depleted during the second quarter of 2026, and additional capital will be required to execute the business plan.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Based on these criteria, the Company’s emerging growth company status is currently expected to expire onDecember 31, 2026, unless it earlier meets one of the disqualifying conditions described above.

Note 2 –Property & Equipment, Intangible Assets, and Software Development Costs

Property and equipment and software development costs consisted of the following as of:

The Company recognized depreciation expense of $5,108 and $18,016 for the years ended December 31, 2025 and 2024, respectively, related to property and equipment, amortization expense of $963 and $531 for the years ended December 31, 2025 and 2024, respectively, related to intangible assets, and amortization expense of $1,551,845 and $2,031,852 for the years ended December 31, 2025 and 2024, respectively, related to software development costs.

Note 3 –Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

Note 4 –Notes Payable

The Company originally issued a secured bridge note in November 2022 with a principal amount of $2.2 million, including a $200,000 original issue discount, bearing interest at 10% and secured by substantially all of the Company’s assets. In connection with this financing, the Company issued 12,000 common stock warrants and provided the lender with a conversion option for the original issue discount and accrued interest at fixed prices. In April 2023, the Company entered into an additional secured bridge note with the same investor for $825,000, including a $75,000 original issue discount, and issued 26,000 additional warrants. During April and May 2023, the Company modified the terms of the Prior Note, cancelled and replaced the original warrants, and extended the maturity date, resulting in the issuance and vesting of additional warrants and the recognition of incremental debt discount. In July 2023, the Company extended the maturity date of the New Note, which resulted in the vesting of previously unvested warrants. All warrants issued in connection with these financings were classified in equity as they were indexed to the Company’s common stock in accordance with ASC 815-40.

On April 9, 2024, the Company and the investor entered into an Amendment and Waiver Agreement relating to the Company’s outstanding Bridge Notes.

The Company agreed to pay $2.75 million in cash to the holder in repayment of the principal of the Bridge Notes (exclusive of the $275,000 of original issue discount on the Bridge Notes) shortly after the closing by the Company of one or more equity financings with total gross proceeds to the Company of not less than $6,000,000.

On April 26, 2024, the Company repaid $2.75 million of principal on its outstanding Secured Bridge Notes.

Effective April 9, 2024, the holder converted $911,384 (the “Rollover Amount”) which is equal to the (i) unpaid accrued interest on the Bridge Notes plus (ii) the original issue discount (“OID”) on the Bridge Notes, into equity securities of the Company (the “Rollover Securities”).

The Rollover Securities consist of (i)27,256 prefunded common stock warrants with a per share exercise price of $0.017 per share (the “Prefunded Warrants”) and (ii)27,256 non-prefunded warrants (the “Non-Prefunded Warrants”) with a current per share exercise price equal to $1.1815.

The number of Non-Prefunded Warrants was determined by dividing the Rollover Amount by $33.44 (the original exercise price). The number of Non-Prefunded Warrants is equal to the number of Prefunded Warrants (i.e. 100% warrant coverage). The Non-Prefunded Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. The original exercise price of $33.44 has been subsequently adjusted to $1.1815. In order to assure compliance with applicable Nasdaq rules, the Non-Prefunded Warrants shall not be exercisable for six months following the date of issue.

The Company issued to the holder 2,942 new common stock warrants with a five-year term as a loan extension fee (“Fee Warrants”). The Fee Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. The original exercise price of $33.44 has been subsequently adjusted to $1.1815. In order to assure compliance with applicable Nasdaq rules, the Fee Warrants shall not be exercisable for six months following the date of issue.

The Non-Prefunded Warrants and Fee Warrants had a total valuation of $811,402 and the Prefunded Warrants had a valuation of $732,370. As a result, the Company recorded $911,384 as a non-cash charge in connection with the issuance of warrants related to the Bridge Notes and a change in the fair value of warrants of $632,388 upon payoff of the debt during the nine months ended September 30, 2024. All warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

On September 25, 2025, the prefunded warrants were exercised.

On June 20, 2025, the Company entered into a promissory note to finance its directors and officers (“D&O”) insurance premium. The original principal amount of the note was $151,300 and bears interest at a fixed annual rate of 8.250%. The note requires monthly payments of principal and interest and matures on May 20, 2026.

As of December 31, 2025, the outstanding principal balance was $60,520. The note is unsecured and contains no financial covenants.

Note 5 –Commitments and Contingencies

Operating Lease

On March 25, 2024, the Company entered into a new 37-month operating lease commencing on April 1, 2024 with two separate two year renewal options. The monthly base rent for months two through 14 is $2,456, increasing to $3,070 for months 15 through 26, and ending at $3,684 for months 27 through 37. Rent expense, as part of general and administrative expenses in the statements of operations, was $81,344 and $85,842 for the years ended December 31, 2025 and 2024, respectively.

Litigation

In the normal course of business, the Company is party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will not have a material adverse effect on the Company. There are no active litigations as of the date the financial statements were issued. However, a pre-IPO investor has contacted the Company claiming damages caused by alleged acts and omissions arising from a private financing by the Company. No complaint has been filed by the investor. The alleged damages asserted by the investor are less than approximately $300,000. The outcome of the complaint was neither probable or estimable as of the date the financial statements were issued.

Note 6 -Share-based Compensation

Stock Options

The fair value of each option award is estimated on the date of grant using a Black Scholes option valuation model that uses the assumptions noted in the following table. Because Black Scholes option valuation models incorporate ranges of assumptions for inputs, these ranges are disclosed. Expected volatilities are based on implied volatilities from traded options on the Company’s stock, historical volatility of the Company’s stock, and other factors. The expected term of options granted is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following table presents the activity for stock options outstanding:

The following table presents the composition of options outstanding and exercisable:

Restricted Stock Units

The following table presents the activity for restricted stock units outstanding:

The Company recognized share-based compensation expense related to stock options and restricted stock units of $207,667 and $736,797 for the years ended December 31, 2025 and 2024, respectively. The remaining unvested share-based compensation expense of $169,580 is expected to be recognized over the next 36 months.

Note 7 –Equity Financings

Equity Line Common Stock Purchase Agreement

On November 25, 2024, the Company entered into a new equity line Common Stock Purchase Agreement and a related registration rights agreement with White Lion. Pursuant to the Common Stock Purchase Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to $10,000,000 in aggregate gross purchase price of newly issued shares of the Company’s common stock, subject to certain limitations and conditions set forth in the Common Stock Purchase Agreement. On July 30, 2025, the Company amended the equity line Common Stock Purchase Agreement from $10,000,000 to $50,000,000 and extended the commitment to December 31, 2027.

During the year ended December 31, 2025, the Company issued 995,000 shares of Common stock under the Equity Line Common Stock Purchase Agreement for total proceeds of $3.7 million.

At-the-Market Sales Agreement

During the year ended December 31, 2025, the Company issued 1,007,761 shares for aggregate proceeds of approximately $2.8 million pursuant to an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with Ascendiant Capital Markets, LLC, as sales agent (the “Agent”).

Under the Sales Agreement, the Company may sell shares of its common stock having an aggregate offering price of up to $10,000,000 from time to time, through an “at the market offering” (the “ATM Offering”). The aggregate market value of shares that the Company can sell under the Sales Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction.

Subsequent to December 31, 2025, and as of the date of this filing, the Company sold 754,925 shares under the Sales Agreement for proceeds of $0.9 million and currently has $0.0 million of unsold availability under the ATM facility.

$2.3 Million Convertible Series B Preferred Stock and Warrants Financing

On April 23, 2024, the Company entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing. The Company received $2,314,000 of gross proceeds in connection with the closing of this financing.

At the closing, the Company issued 2,314 shares of Series B convertible preferred stock (“Series B Preferred Stock”) at a purchase price of $1,000 per share of Series B Preferred Stock. The Series B Preferred Stock is convertible into Common Stock at an initial conversion price (“Conversion Price”) of $31.47 per share of Common Stock. The Company also issued warrants (“Warrants”) exercisable for 73,538 shares of Common Stock with a five-year term and an initial exercise price of $31.47 per share, which has been subsequently adjusted to $1.1815. The proceeds of this financing, together with other available cash resources, were used to repay outstanding debt and for general corporate purposes.

Holders of the Series B Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly. The Company has the option to pay dividends on the Series B Preferred Stock in additional shares of Common Stock. The Company also has the option to cumulate or “capitalize” the dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series B Preferred Stock. As of September 30, 2025, the Company has elected to capitalize all dividends declared.

On February 19, 2025,140 shares of Series B Preferred stock and capitalized dividends were converted to 33,308 shares of Common Stock.

In April 2025,447 shares of Series B Preferred stock and capitalized dividends were converted to 85,225 shares of Common stock.

On June 26, 2025,192 shares of Series B Preferred stock and capitalized dividends were converted to 34,523 shares of Common Stock.

On August 5, 2025, the Company entered into a series of exchange agreements (the “Exchange Agreements”) with certain accredited investors to exchange 569 outstanding shares of the Company’s Series B preferred stock (including accrued dividends thereon) for 132,724 shares of common stock at an exchange price of $2.65 per common share. The issuance of the exchange common shares is intended to be exempt from registration pursuant to the exemptions under Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).

As of December 31, 2025, all Series B Preferred stock had been converted to Common stock.

$750,000 Series C Preferred Stock and Warrants Financing

On June 30, 2025, the Company entered into a Securities Purchase Agreement with accredited investors for a convertible preferred stock and warrants financing. The Company received $750,000 of gross proceeds in connection with the closing of this financing.

At the closing, the Company issued 750 shares of Series C convertible preferred stock (“Series C Preferred Stock”) at a purchase price of $1,000 per share of Series C Preferred Stock. The Series C Preferred Stock is convertible into Common Stock at an initial conversion price (“Series C Conversion Price”) of $4.77 per share of Common Stock, which has been adjusted to $1.1815. The Company also issued warrants exercisable for 314,466 shares of Common Stock with a five year term and an initial exercise price of $4.77 per share, which has been subsequently adjusted to $1.1815.

The proceeds of this financing, together with other available cash resources, will be used for general corporate purposes.

Warrants

The following table presents the activity for warrants outstanding:

During the year ended December 31, 2025, in connection with the Series C Preferred Stock Issuance, the Company issued 314,466 warrants to purchase shares of common stock at the exercise price of $4.77. The per share exercise price has been adjusted to $1.1815.

During the year ended December 31, 2024, in connection with the payoff of the New Note and Prior Note, the Company issued 130,989 warrants to purchase shares of common stock at the exercise price of $33.44. The per share exercise price has been adjusted to $1.1815.

Note 8 –Income Taxes

For the years ended December 31, 2025 and 2024, the Company recorded no income tax benefit for the net operating losses incurred during the year, due to the uncertainty of realizing a benefit from those items.

The following is a reconciliation of the statutory federal income tax rate to the effective tax rate reported in the financial statements:

Significant components of the Company’s deferred tax assets as of December 31, 2025 and 2024 are summarized below.

For the year ended December 31, 2025, the Company has federal and state net operating loss carryforwards of $29,496,111 and $1,036,222, respectively.

The federal net operating loss carryforwards do not have an expiration, however, are limited to 80% of the excess of taxable income over the total net operating loss deduction. The state net operating loss carryforwards will conform to the federal provisions.

After weighing all available positive and negative evidence for the years ended December 31, 2025 and 2024, the Company has recorded a valuation allowance of $9,225,635 and $6,908,036, respectively.

The Company continuously monitors its current and prior filing positions in order to determine if any unrecognized tax positions should be recorded. The analysis involves considerable judgement and is based on the best information available. For the years ended December 31, 2025 and 2024, the Company is not aware of any positions which require an uncertain tax position liability.

The Company is subject to taxation in the United States and Colorado. The statute of limitations on the initial tax return filed for 2021 tax year expired in 2025 for federal and in 2026 for state jurisdictions.

The Company has significant federal and state net operating loss carryforwards (“NOLs”). The proposed merger with Thramann Holdings is expected to result in an ownership change under Internal Revenue Code Section 382. An ownership change would subject the Company’s NOLs to an annual limitation based on the fair market value of the Company immediately prior to the ownership change multiplied by the applicable long-term tax-exempt rate. As a result, a substantial portion of the Company’s NOLs may not be available to offset future taxable income.

Because the Company maintains a full valuation allowance against its deferred tax assets, any such limitation would not impact the Company’s financial statements. The Company will continue to evaluate the potential impact of Section 382 limitations in future periods.

Note 9 –Net Loss Per Share

Basic net loss per share is computed by dividing net loss, which is allocated based upon the proportionate amount of weighted average shares outstanding, to each class of stockholder’s stock outstanding during the period. For the calculation of diluted net loss per share, net loss per share attributable to common stockholders for basic net loss per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans.

The reverse stock splits did not change the authorized number of shares of the Company’s common stock. No fractional shares were issued and any fractional shares resulting from the reverse stock splits were rounded up to the nearest whole share.

The reverse stock splits applied to the Company’s outstanding warrants, stock options and restricted stock units. The number of shares of common stock into which these outstanding securities are convertible or exercisable were adjusted proportionately as a result of the reverse stock splits. The exercise prices of any outstanding warrants or stock options were also proportionately adjusted in accordance with the terms of those securities and the Company’s equity incentive plans.

As a result of the reverse stock splits, unless described otherwise, all references to common stock, share data, per share data and related information contained in these financial statements have been retroactively adjusted to reflect the effect of the reverse stock splits for all periods presented. In addition, any fractional shares that would otherwise be issued as a result of the reverse stock splits were rounded up to the nearest whole share. Further, the number of shares issuable and exercise prices of stock options and warrants have been retrospectively adjusted in these financial statements for all periods presented to reflect the reverse stock splits.

As of December 31, 2025 and 2024,567,872 and 177,536, respectively of potentially dilutive weighted average shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented.

Note 10 -Recently Issued Accounting Pronouncements

ASU 2024 03 — Income Statement—Reporting Comprehensive Income—Expense Disaggregation (Subtopic 220 40)

In March 2024, the FASB issued ASU 2024 03, which requires public business entities to provide disaggregated information about certain income statement expense captions. The amendments require tabular disclosure of specified natural expense categories underlying relevant functional expense line items. ASU 2024 03 is effective for fiscal years beginning after December 15, 2026, with interim disclosure required beginning in 2027. Early adoption is permitted. The Company is evaluating the impact of this standard and expects it will result in expanded footnote disclosures but will not materially impact its consolidated financial position or results of operations.

ASU 2025 01 — Income Statement—Reporting Comprehensive Income—Expense Disaggregation (Subtopic 220 40): Clarifying the Effective Date

In January 2025, the FASB issued ASU 2025 01 to clarify the effective date and transition requirements of ASU 2024 03. ASU 2025 01 is effective for the same periods as ASU 2024 03 — fiscal years beginning after December 15, 2026, and interim periods beginning in 2027. Early adoption is permitted.

The Company does not expect this update to have a material impact beyond the expanded disclosures required by ASU 2024 03.

ASU 2025 06 — Intangibles—Goodwill and Other—Internal Use Software (Subtopic 350 40)

In September 2025, the FASB issued ASU 2025 06, which modernizes the accounting for internal use software by removing the legacy project stage model and clarifying capitalization thresholds. The ASU also enhances disclosure requirements for significant software development activities. ASU 2025 06 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted. The Company is assessing the impact of this standard and expects it may affect the timing of expense recognition for internal use software projects and require incremental disclosures.

ASU 2025 03 — Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in a VIE Acquisition

In May 2025, the FASB issued ASU 2025 03, which amends the guidance for identifying the accounting acquirer in a business combination when the legal acquiree is a variable interest entity (VIE). The amendments require entities to apply the general acquirer identification framework in ASC 805 rather than defaulting to the VIE primary beneficiary model. ASU 2025 03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this update to have a material impact but will continue to evaluate its applicability to future acquisition transactions.

ASU 2023 05 — Business Combinations—Joint Venture Formations (Subtopic 805 60)

In August 2023, the FASB issued ASU 2023 05, which provides recognition and initial measurement guidance for contributions made to a joint venture upon formation. The ASU requires joint ventures to measure contributed net assets at fair value on the formation date. ASU 2023 05 is effective for joint ventures formed on or after January 1, 2025. Early adoption is permitted. The Company does not expect this standard to have a material impact on its consolidated financial statements.

Management’s Evaluation

The Company is in the process of assessing the impact of these recently issued ASUs. At this time, the Company does not expect that adoption will have a material impact on the consolidated financial statements; however, the Company anticipates expanded disclosures, particularly related to expense disaggregation and internal use software development activities, once the standards become effective.

Note 11 –Subsequent Events

Management evaluated subsequent events and transactions that occurred after the balance sheet date, up to the date that the financial statements were issued. Based upon this review, other than as set forth below, management did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

On February 17, 2026, Auddia, acting upon the recommendation of its special committee of independent directors, entered into a definitive merger agreement providing for a business combination between Auddia and the Company.

Auddia shareholders are expected to own approximately 20% of the combined company at closing. Approximately 80% of the combined company is expected to be owned at closing by Jeff Thramann. The consideration payable to Mr. Thramann by the combined company will be a combination of (i) convertible preferred stock and (ii) non-convertible debt.

The exact percentage of the combined company that shareholders will own after completion of the merger is subject to adjustment based on Auddia’s net cash at the time of closing. The closing of the merger will be conditioned on Auddia having at least $12 million net cash on hand at closing in order to provide cash runway to fund the combined company to key future business milestones.

The Company has significant federal and state net operating loss carryforwards (“NOLs”). The proposed merger with Thramann Holdings is expected to result in an ownership change under Internal Revenue Code Section 382. An ownership change would subject the Company’s NOLs to an annual limitation based on the fair market value of the Company immediately prior to the ownership change multiplied by the applicable long-term tax-exempt rate. As a result, a substantial portion of the Company’s NOLs may not be available to offset future taxable income.

Because the Company maintains a full valuation allowance against its deferred tax assets, any such limitation would not impact the Company’s financial statements. The Company will continue to evaluate the potential impact of Section 382 limitations in future periods.