ABRI SPAC I(ASPA) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis for the three months ended March 31, 2024 Item 1. Financial Statements The unaudited consolidated financial statements for Q1 2024 reflect zero revenue, a $1.21 million net loss, $52,123 cash, and significant going concern uncertainty post-merger Consolidated Balance Sheets Consolidated Balance Sheet Summary (as of March 31, 2024) | Metric | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $52,123 | $612,183 | | Total current assets | $524,612 | $994,366 | | Goodwill | $5,991,208 | $5,991,208 | | Intangible Assets | $4,866,719 | $5,244,437 | | Total assets | $11,382,539 | $12,230,012 | | Liabilities & Equity | | | | Total current liabilities | $5,750,581 | $5,386,708 | | Total liabilities | $9,718,508 | $9,354,635 | | Total stockholders' equity | $1,664,031 | $2,875,377 | Unaudited Consolidated Statements of Operations Statement of Operations Summary (Three Months Ended March 31) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Total operating expenses | $1,211,381 | $577,856 | | Loss from operations | ($1,211,381) | ($577,856) | | Net loss | ($1,211,381) | ($468,684) | | Net loss per share (Basic and Diluted) | ($0.09) | ($0.08) | Unaudited Consolidated Statements of Cash Flows Cash Flow Summary (Three Months Ended March 31) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($560,095) | ($234,463) | | Net cash provided by (used in) investing activities | $0 | ($392,513) | | Net cash provided by financing activities | $35 | $525,000 | | Net change in cash | ($560,060) | ($101,976) | | Cash - End of period | $52,123 | $279,317 | Notes to Unaudited Consolidated Financial Statements - The company completed its business combination with Abri SPAC I, Inc. on November 2, 2023, and changed its name to Collective Audience, Inc. The transaction was treated as a reverse acquisition of Abri by DLQ[34][38][45] - Operating losses of $(1,211,381) and negative operating cash flows for Q1 2024 raise substantial doubt about the Company's ability to continue as a going concern; future viability is dependent on obtaining outside funding[54][55] - The company reported zero revenue for the three months ended March 31, 2024, across all its streams: Lead Generation, Affiliate Management, and Reengagement[85] - Subsequent to the quarter end, the company entered into agreements to acquire DSL Digital LLC (June 28, 2024) and BeOp (August 1, 2024) to expand its marketing platform and B2B advertising capabilities[113][118] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's post-merger financial condition, recent acquisitions, zero Q1 2024 revenue, increased operating expenses, severe liquidity issues, and ongoing Nasdaq delisting challenges Recent Developments and Business Combination - The company completed its business combination with Abri SPAC I, Inc. on November 2, 2023, and is now operating primarily through its subsidiary, DLQ Inc[131] - Post-quarter, the company acquired BeOp, a French company specializing in conversational advertising, to enhance its programmatic advertising and data capabilities[122][123][124] - The company also acquired a 51% majority stake in DSL Digital, a global marketing platform with proprietary AI technology, to launch its "Audience Service" offering and expand into B2B advertising[129][130] Nasdaq Listing Compliance Issues - On June 24, 2024, the company received a delisting notice from Nasdaq for failing to regain compliance with the minimum market value of listed securities (MVLS) and publicly held shares (MVPHS) rules[134][135] - Failure to timely file its Form 10-K for FY 2023 and Form 10-Q for Q1 2024 served as additional and separate bases for the delisting notice[134][141][143] - The company also received a notice on April 19, 2024, for failing to maintain a minimum bid price of $1.00 per share[139] - The company has requested a hearing to appeal the delisting determination, but there is no assurance the appeal will be successful[134][138] Results of Operations - The company generated no revenue in Q1 2024, which it attributes to its focus on completing the Initial Business Combination[146] Operating Expenses Comparison (Three Months Ended March 31) | Expense Category | 2024 ($) | 2023 ($) | $ Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $50,000 | $0 | $50,000 | N/A | | General and administrative | $788,663 | $157,723 | $625,940 | 397% | - The 397% increase in general and administrative expenses was primarily due to legal costs post-business combination and SEC filings[150] Liquidity and Capital Resources - As of March 31, 2024, the company had only $52,123 in cash and a working capital deficiency of ($1,211,381)[152] - The company's operating revenues are insufficient to fund operations, and its losses and negative cash flows raise substantial doubt about its ability to continue as a going concern[156] - The company will need to raise additional capital to satisfy its liquidity needs and may seek up to $30 million in financing from its Sponsor, though there is no guarantee of receiving such funds[153][154] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company has determined that quantitative and qualitative disclosures about market risk are not applicable for the reporting period - This section is marked as 'Not Applicable'[170] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024, due to material weaknesses in internal control over financial reporting, with remediation efforts underway - The company identified material weaknesses in its internal control over financial reporting[172] - As a result of these weaknesses, the CEO and CFO have concluded that the company's disclosure controls and procedures are not effective[172] - Management is implementing a remediation plan, but cannot provide assurance as to when the efforts will be complete or sufficient[174] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other disclosures relevant to the company's operations Item 1. Legal Proceedings This section directs readers to Note 11 of the condensed consolidated financial statements for a description of material pending legal proceedings - For details on legal proceedings, the report refers to Note 11 in Part I, Item 1[178] Item 1A. Risk Factors The company advises investors to refer to the risk factors section in its Annual Report on Form 10-K for the year ended December 31, 2023, for a comprehensive discussion of potential risks - The report refers to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2023[179] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the period, the company engaged in several unregistered sales of equity securities, including warrants, a convertible promissory note, and shares for acquisitions - In February 2024, the company sold warrants to purchase up to 1,000,000 shares of common stock at an exercise price of $5.00 per share in a private placement for gross proceeds of approximately $10,000[180] - In April 2024, the exercise price of warrants from February 2024 and December 2023 private placements was reset to $0.185 per share[181] - On March 31, 2024, the company issued a convertible promissory note in the principal amount of $100,000 with an 8% interest rate and a two-year maturity[183] - Unregistered restricted shares were issued in connection with the acquisitions of DSL Digital, LLC and BeOp, exempt from registration under Section 4(a)(2) of the Securities Act[184] Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the reporting period - The company reports 'None' regarding defaults upon senior securities[186] Item 4. Mine Safety Disclosures This section is not applicable to the company's business operations - This section is marked as 'Not Applicable'[187] Item 5. Other Information The company confirms that none of its directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan during the three months ended March 31, 2024 - No directors or officers entered into, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter[188] Item 6. Exhibits This section indexes exhibits filed with the Form 10-Q, including merger agreements, amendments, equity exchange agreements for DSL and BeOp acquisitions, and various corporate and financing documents - The report includes an index of all exhibits filed, such as the Merger Agreement with Abri SPAC I, Inc. and its subsequent amendments[190] - Key agreements filed as exhibits include the Equity Exchange Agreement for DSL Digital and the Share Exchange Agreement for BeOp[190]