Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File No. 001-40071 AUDDIA INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 45-4257218 (St ...

Financial Position - As of December 31, 2022, the company reported cash and equivalents of $1.66 million, which is only sufficient to fund current operating plans into the second quarter of 2023[84]. - The company had stockholders equity of $3.85 million as of December 31, 2022, exceeding the Nasdaq minimum requirement of $2.5 million[158]. - As of March 10, 2023, executive officers, directors, and principal stockholders beneficially own approximately 37% of the outstanding common stock, allowing them to control most matters submitted to stockholders[149]. - The company has not declared or paid cash dividends on its capital stock and intends to retain future earnings for business growth[174]. - As of December 31, 2022, the company had cash and cash equivalents totaling $1,661,434[250]. - The company primarily invests in demand deposit accounts and money market funds, focusing on capital preservation and liquidity needs[250]. Operating Losses and Expenses - The company incurred net losses of $6,897,446 and $13,478,069 for the years ended December 31, 2022, and 2021, respectively[86]. - Cash used in operations for the year ended December 31, 2022, was $4,752,750[86]. - The company anticipates significant expenses related to the national launch of the faidr App, recruiting content creators, and technology development, which will increase operating losses[86]. - The company expects to continue incurring significant expenses and operating losses for the foreseeable future, with no assurance of achieving profitability[87]. Revenue and Growth - Future revenue growth is heavily dependent on the successful development and commercialization of new software services[94]. - The company has made significant investments in brand promotion, but these may not generate proportional revenue increases[125]. Internal Controls and Compliance - The company has identified material weaknesses in internal control over financial reporting, which could adversely affect financial statement accuracy[95]. - The company has identified material weaknesses in its internal control over financial reporting, which may affect compliance with Section 404 of the Sarbanes-Oxley Act[167]. - Compliance with evolving privacy and data protection regulations, such as GDPR and CCPA, may incur substantial costs and affect business practices[120]. Capital and Stockholder Concerns - The company may seek additional capital through public and private equity offerings, which could dilute existing stockholders' interests[92]. - The company issued 4,590,590 Series A Warrants in the IPO, which could lead to dilution for existing stockholders if exercised[151]. - In July 2021, holders exercised 3,498,898 Series A Warrants, leaving 1,091,692 outstanding as of March 10, 2023[151]. - The company may face delisting from Nasdaq, which could adversely affect liquidity, increase volatility, and hinder capital raising efforts[160]. - The company is classified as an "emerging growth company" and intends to rely on reduced disclosure requirements, which may affect stock attractiveness[162]. - The company’s charter includes anti-takeover provisions that may discourage beneficial acquisitions and limit stockholder influence[171]. - The company’s stock may be subject to penny stock regulations if delisted, affecting market liquidity and trading[159]. - The company’s exclusive forum provisions may limit stockholders' ability to bring claims in favorable jurisdictions, potentially discouraging lawsuits[178]. Personnel and Management - The company is highly dependent on its executive team, and the loss of key personnel could adversely impact its objectives[111]. - Recruiting and retaining qualified personnel is critical, with intense competition leading to high turnover rates[112]. - The company must effectively manage expected growth in operations, requiring expansion of managerial and operational systems[113]. Cybersecurity and Legal Risks - Cybersecurity-related attacks or data breaches could significantly harm the company's reputation and business operations[114]. - The company faces potential liabilities from cybersecurity incidents that may exceed available insurance coverage[116]. - The company may incur substantial liability related to indemnification obligations with customers regarding data security and confidentiality breaches[147]. - The company may face claims from third parties regarding open source software, which could lead to litigation and additional costs[143]. - The company may face litigation or regulatory inquiries that could adversely affect its operations and reputation[128]. Market and Competitive Risks - The company relies on the established music licensing framework, and any changes could impact operational costs and content access[102]. - The patent prosecution process is expensive and time-consuming, and failure to secure patents could adversely affect the company's competitive position[106]. - The company faces risks related to intellectual property, including potential claims of infringement that could be costly and time-consuming to defend[139]. - The company has applied for patent protection in the U.S. but cannot assure that any applications will result in issued patents[134]. - The company relies on unpatented proprietary technology and confidentiality agreements to protect its trade secrets, but these measures may not be sufficient[135]. - The company's common stock price is likely to be volatile, influenced by factors such as competitive products, regulatory developments, and financial results[153]. Investment Risks - Future investment income may fall short of expectations due to changes in interest rates, potentially leading to losses in principal[251]. - The market value of fixed rate securities may be adversely affected by rising interest rates, while floating rate securities may yield less income if rates fall[251].