Auddia(AUUD) - 2024 Q3 - Quarterly Report

Financial Performance - As of September 30, 2024, the company had an accumulated deficit of $87,003,511, indicating significant operating losses since inception[117] - Total revenues for the three months ended September 30, 2024, were$0, as the company continues to develop its faidr and podcasting Apps to establish new revenue streams[138] - Total revenues for the nine months ended September 30, 2024, were $0, as the company continues to focus on developing its faidr and podcasting Apps[146] - Net loss for the three months ended September 30, 2024, was$(1,949,428), a decrease of $167,054 or 7.9$(2,116,482) for the same period in 2023[138] - Cash used in operating activities for the nine months ended September 30, 2024 was ($3,803,324), primarily due to a net loss of ($6,460,181)[173] Funding and Financing - The company secured approximately $10.4 million in additional financing during 2024, but will need further funding to complete product development and scale operations[120] - The company has secured$10.4 million of additional financing in 2024, which will fund operations into the first quarter of 2025[179] - Cash provided by financing activities for the nine months ended September 30, 2024 was $7,572,130, primarily from the issuance of common shares totaling$8,176,048[176] - The company entered into a Secured Bridge Note financing, receiving $750,000 in gross proceeds with a principal amount of$825,000 and a 10% interest rate, maturing on July 31, 2023[156] - The interest rate on the New Note increased to 20% upon extension of the maturity date to November 30, 2023, with 26,000 common stock warrants issued at a fixed exercise price of $15.25 per share[157] - The company has sold 4,815,263 shares to White Lion for total proceeds of$8,176,048 through September 30, 2024[169] Expenses and Costs - Total operating expenses for the three months ended September 30, 2024, were $1,947,850, an increase of$118,288 or 6.5% from $1,829,562 for the same period in 2023[137] - Direct costs of services increased by$11,446 or 26.3% from $43,470 for the three months ended September 30, 2023, to$54,916 for the same period in 2024, primarily due to higher hosting and music service costs[139] - Sales and marketing expenses decreased by $33,847 or 10.7$316,297 for the three months ended September 30, 2023, to $282,450 for the same period in 2024, attributed to reduced marketing promotion costs[140] - Research and development expenses increased by$5,952 or 2.6% from $227,133 for the three months ended September 30, 2023, to$233,085 for the same period in 2024, mainly due to increased capitalized R&D expenses[141] - General and administrative expenses increased by $103,943 or 13.4$777,496 for the three months ended September 30, 2023, to $881,439 for the same period in 2024, driven by higher consulting and legal fees[142] - Direct costs of services increased by$22,507 or 17.2% from $130,809 for the nine months ended September 30, 2023, to$153,316 for the same period in 2024, primarily due to higher hosting costs[148] Product Development and Strategy - The company is exploring various merger and acquisition options to accelerate user adoption and subscriber growth, with a focus on acquiring users of radio-streaming apps[122] - The company launched the faidr app on February 15, 2022, which allows users to listen to AM/FM radio stations and podcasts with commercial interruptions removed[107] - The faidr app includes exclusive content offerings, branded as faidrRadio, which was added in February 2023[107] - The company plans to introduce a "Flex Revenue" model in 2025, allowing podcasters to maximize revenue through various monetization channels[114] - The company sunsetted the Vodacast app in July 2024, integrating its podcasting capabilities into the faidr app[110] Compliance and Reporting - The company reported stockholders' equity of $2,415,012 as of September 30, 2023, which did not meet Nasdaq's minimum requirement of$2,500,000[125] - The company is classified as a "smaller reporting company" with a market value of stock held by non-affiliates less than $700 million and annual revenue below$100 million for the most recently completed fiscal year[192] - The company has opted to take advantage of the extended transition period for compliance with new accounting standards as an "emerging growth company" until it either opts out or no longer qualifies[190] - A reverse share split was executed on February 26, 2024, combining every twenty-five shares into one share of common stock[128] Cash Position - The company had cash and cash equivalents of $3,773,827 as of September 30, 2024, compared to$804,556 as of December 31, 2023, with working capital of approximately $3.4 million[154] - The company expects expenses to increase due to ongoing development and marketing of its product, faidr[180] - The company issued 50,000 Fee Warrants with a five-year term as a loan extension fee, with an exercise price of$1.967[165] Valuation of Stock Options - The fair value of stock options is determined using the Black-Scholes model, considering stock price, expected life, estimated volatility, and risk-free interest rate[188]