Financial Performance - The company incurred significant net losses of $13,478,069 and $4,051,221 for the years ended December 31, 2021 and 2020, respectively[84]. - Cash used in operations for the year ended December 31, 2021 was $5,428,094, with cash and equivalents on hand of $6,345,291 at the same date[84]. - The company anticipates continued significant expenses and operating losses as it invests in the national launch of the Faidr App and recruitment of podcasters for the Vodacast App[84]. - Future revenue growth is heavily dependent on the successful development and commercialization of new software products[89]. - The company may need additional funding to complete the development of its full product line and scale products with demonstrated market fit[86]. Internal Controls and Compliance - The company has identified material weaknesses in its internal control over financial reporting, which could adversely affect its financial statements[91]. - The company expects to expend significant resources to develop necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act[97]. - The company may face increased costs and compliance challenges as it transitions to a public company, particularly regarding internal controls and financial reporting[160]. - The company has identified material weaknesses in its internal control over financial reporting, which may impact compliance with Section 404 of the Sarbanes-Oxley Act[163]. Intellectual Property and Legal Risks - The company seeks to protect its proprietary position by filing patent applications, but there is no guarantee that additional patents will be issued[100]. - The patent prosecution process is expensive and time-consuming, which may hinder the company's ability to obtain necessary patent protections[103]. - The company relies on its intellectual property for competitive advantage, but risks exist regarding the adequacy of protection[130]. - The company has applied for patent protection in the U.S. but cannot guarantee that any applications will result in issued patents[131]. - Claims of intellectual property infringement could lead to costly litigation and negatively impact operating profits[139]. - Indemnity provisions in agreements may expose the company to substantial liability for intellectual property infringement[145]. - The company may face increased litigation risks as its business expands, potentially affecting revenue and financial condition[127]. Operational Risks - The Faidr platform's operational costs may be impacted by changes in music licensing costs and rights to play music content[98]. - The company faces risks related to errors, failures, or bugs in its platform, which could adversely affect operating results and growth prospects[104]. - Retaining key employees and attracting qualified personnel is critical for the company's success, as competition for skilled personnel is intense[105][106]. - The company must effectively manage expected growth in operations, requiring expansion of managerial and operational systems to support product rollout and user projections[107]. - Cybersecurity-related attacks or significant data breaches could negatively impact the company's business, leading to unauthorized access and potential liabilities[109][110]. - Compliance with changing regulations regarding privacy and data protection may increase costs and affect how the company collects and uses personal information[114][116]. - The company may face challenges in addressing new laws and regulations, which could result in significant costs and affect its ability to process user data[117]. Market and Stock Information - The common stock price is expected to be volatile, influenced by factors such as competitive products, regulatory developments, and financial results[151]. - The company had cash and cash equivalents totaling $6,345,291 as of December 31, 2021, primarily invested in demand deposit accounts and money market funds[243]. - The company is classified as an "emerging growth company" and will remain so until total annual gross revenues exceed $1.07 billion or other specified conditions are met[158]. - The company does not anticipate paying cash dividends in the foreseeable future, with capital appreciation being the sole source of gain for investors[170]. - The company may not sustain an active trading market for its common stock and Series A Warrants, which could affect liquidity[154]. - The company issued 4,590,590 Series A Warrants in the IPO, which are exercisable for an equal number of shares of common stock[150]. - As of February 17, 2022, 1,091,692 Series A Warrants have been exercised, leaving 3,498,898 outstanding[150]. - The company’s corporate governance provisions may discourage or delay potential acquisitions, impacting stockholder interests[166]. Financial Statements and Reporting - Auddia Inc. reported its annual financial statements for the years ended December 31, 2021, and 2020, including balance sheets and statements of operations[246]. - The company has independent registered public accounting firm reports included in its annual financial statements[246]. - Statements of changes in stockholders' equity and cash flows for the years ended December 31, 2021, and 2020 are also part of the financial documentation[246].
Auddia(AUUD) - 2021 Q4 - Annual Report