Auddia(US:AUUD)2024-08-07 20:30PART I – FINANCIAL INFORMATION Financial Statements The company's unaudited condensed financial statements for June 30, 2024, show increased assets and equity, reduced liabilities, and continued net losses Condensed Balance Sheets Condensed Balance Sheet Highlights (Unaudited) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,882,205 | $804,556 | | Total current assets | $2,020,853 | $862,808 | | Total assets | $5,140,550 | $4,403,048 | | Liabilities & Equity | | | | Total current liabilities | $363,163 | $3,982,628 | | Total liabilities | $431,988 | $3,982,628 | | Total shareholders' equity | $4,708,562 | $420,420 | | Total liabilities and shareholders' equity | $5,140,550 | $4,403,048 | Condensed Statements of Operations Statement of Operations Summary (Unaudited) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Total operating expenses | $3,709,010 | $3,631,696 | | Loss from operations | ($3,709,010) | ($3,631,696) | | Net loss | ($4,510,753) | ($4,478,174) | | Net loss per share (basic and diluted) | ($2.38) | ($7.96) | Condensed Statements of Changes in Shareholders' Equity - Total shareholders' equity increased from $420,420 at December 31, 2023, to $4,708,562 at June 30, 2024. This was driven by the issuance of common and preferred stock, and conversion of debt to equity, which offset the net loss for the period19 Condensed Statements of Cash Flows Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,633,821) | ($2,214,728) | | Net cash used in investing activities | ($537,120) | ($529,503) | | Net cash provided by financing activities | $4,248,590 | $4,687,941 | | Net increase in cash | $1,077,649 | $1,943,710 | | Cash, end of period | $1,882,205 | $3,605,144 | Notes to Condensed Financial Statements - The company executed a 1-for-25 reverse stock split effective February 26, 2024. All stock amounts have been retrospectively adjusted2930 - There is substantial doubt about the company's ability to continue as a going concern due to recurring losses and the need for additional financing. Current cash is not sufficient to execute the business plan beyond the fourth quarter of 20243536 - In April 2024, the company repaid $2.75 million in principal on its Secured Bridge Notes and converted $911,384 of accrued interest and original issue discount into equity securities63 - The company regained compliance with Nasdaq's minimum bid price and stockholders' equity requirements in March and May 2024, respectively. It will be subject to a Mandatory Panel Monitor for one year7375 - During the six months ended June 30, 2024, the company raised approximately $4.9 million through its equity line with White Lion and received $2.314 million in gross proceeds from a convertible preferred stock and warrants financing8788 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the AI-powered audio Superapp 'faidr,' ongoing operating losses, and recent financing activities to support growth and Nasdaq compliance Overview - Auddia is a technology company developing a proprietary AI platform for audio, primarily leveraged in its "faidr" Superapp. The app provides consumers with commercial-free AM/FM radio, ad-reduced podcasts, and exclusive content9798 - The company's AI platform can differentiate between various audio content types (e.g., commercials, songs, news) to enable real-time content replacement for a personalized listening experience100 - The company has incurred significant operating losses since inception, with an accumulated deficit of $85.1 million as of June 30, 2024, and expects expenses to increase with the national launch and enhancement of the faidr App109 Recent Developments - The company is actively exploring mergers and acquisitions to accelerate user adoption and scale the business, though it terminated the planned acquisition of RadioFM in March 2024114115 - Auddia regained compliance with Nasdaq's minimum bid price and stockholders' equity requirements in Q2 2024, resolving prior deficiency notices117119 - A 1-for-25 reverse stock split was effected on February 26, 2024, to help regain compliance with Nasdaq's minimum bid price rule120 Results of Operations Comparison of Operations for the Three Months Ended June 30 | Metric | 2024 | 2023 | Change % | | :--- | :--- | :--- | :--- | | Total operating expenses | $1,654,390 | $1,784,289 | (7.3%) | | General and administrative | $734,325 | $892,510 | (17.7%) | | Interest expense | ($16,647) | ($538,572) | (96.9%) | | Net loss | ($2,303,425) | ($2,322,861) | (0.8%) | Comparison of Operations for the Six Months Ended June 30 | Metric | 2024 | 2023 | Change % | | :--- | :--- | :--- | :--- | | Total operating expenses | $3,709,010 | $3,631,696 | 2.1% | | General and administrative | $1,945,124 | $1,819,336 | 6.9% | | Interest expense | ($169,355) | ($846,478) | (80.0%) | | Net loss | ($4,510,753) | ($4,478,174) | 0.7% | - For the six months ended June 30, 2024, the increase in General and Administrative expenses was driven by higher salary and professional fees related to potential acquisitions and compliance, partially offset by lower stock compensation expense144 Liquidity and Capital Resources - As of June 30, 2024, the company had cash and cash equivalents of $1,882,205. Despite raising $7.1 million in 2024, current funds are only sufficient to support operations into the fourth quarter of 2024147 - On April 26, 2024, the company repaid $2.75 million of principal on its Secured Bridge Notes after raising over $6 million in new equity financing153 - Through June 30, 2024, the company sold 1,940,000 shares to White Lion under its equity line agreement for total net proceeds of $4,852,508160 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing disclosures about market risk - As a smaller reporting company, Auddia is exempt from providing disclosures about market risk under this item183 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, following remedial actions for prior material weaknesses - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by this report (June 30, 2024)184 - The company has taken several remedial actions to address previously identified material weaknesses, including hiring a new CFO in 2023, engaging outside consultants, and implementing new internal control procedures185 PART II – OTHER INFORMATION Legal Proceedings The company is involved in routine legal matters, including a pre-IPO investor claim, but expects no material adverse effect - The company faces routine legal proceedings but does not expect a material adverse impact on its business or financial condition188 - A pre-IPO investor has asserted a claim for damages of less than approximately $300,000. No complaint has been filed, and no accrual has been made as the outcome is not probable or estimable70 Risk Factors No material changes to the company's risk factors have occurred since the Annual Report on Form 10-K for 2023 - There have been no material changes to the company's risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023189 Unregistered Sales of Equity Securities and Use of Proceeds This section is not applicable, as the company did not repurchase any equity securities during the quarter - The company did not repurchase any of its equity securities during the quarter ended June 30, 2024189 Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported189 Mine Safety Disclosures The company reports no mine safety disclosures - None reported189 Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024 - No director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024190 Exhibits This section lists exhibits filed with the quarterly report, including CEO and CFO certifications - The report includes a list of exhibits filed, including CEO and CFO certifications under Section 302 and Section 906 of the Sarbanes-Oxley Act192194