The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
The accompanying notes are an integral part of
these unaudited condensed financial statements.
Notes to Condensed Financial Statements (Unaudited)
Note 1 - Description of Business, Basis of Presentation and Summary
of Significant Accounting Policies
Description of Business
Auddia Inc., formerly Clip Interactive, LLC, (the
“Company”, “Auddia”, “we”, “our”) is a technology company that makes radio broadcasts
and streaming audio content digitally actionable and measurable. Clip Interactive, LLC was initially formed as a Colorado limited liability
company on January 14, 2012 and on November 25, 2019 changed its trade name to Auddia.
On February 16, 2021, the Company completed an
initial public offering (the “IPO”) of 3,991,818 units, at $4.125 per unit, consisting of one share of common stock and one
warrant to purchase one share of common stock at an exercise price of $4.54 per share. In addition, the underwriters exercised their option
to purchase 598,772 Series A warrants to cover over-allotments and were issued 319,346 in representative warrants at an exercise price
of $5.15625 per share. After deducting underwriters commissions and expenses, the Company received net proceeds of approximately $15.1
million and its common stock commenced trading on Nasdaq under the ticker symbol “AUUD”. Concurrently with the IPO, holders
of the Company’s promissory notes, convertible notes, and related party notes, along with accrued interest, were converted into
6,814,570 shares of the Company’s common stock.
Concurrently with the IPO the Company converted
from a Colorado limited liability company to a Delaware corporation. This accounting change has been given retrospective treatment in
the condensed financial statements.
Basis of Presentation
The accompanying financial statements have been
prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
Unaudited interim financial information
The condensed financial statements of
the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission
(the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted from this Quarterly Report, as is permitted by such rules and regulations. Accordingly, these
condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s
Annual Report on Form 10-K. The results for any interim period are not necessarily indicative of results for any future period.
Use of Estimates
The preparation of condensed financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
The condensed financial statements include some
amounts that are based on management's best estimates and judgments. The most significant estimates relate to valuation of capital stock,
warrants and options to purchase shares of the Company's common stock, and the estimated recoverability and amortization period for capitalized
software development costs. These estimates may be adjusted as more current information becomes available, and any adjustment could be
significant.
Reclassification of Presentation
Certain prior year amounts have been reclassified
for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
Risks and Uncertainties
The Company is subject to various risks and uncertainties
frequently encountered by companies in the early stages of development. Such risks and uncertainties include, but are not limited to,
its limited operating history, competition from other companies, limited access to additional funds, dependence on key personnel, and
management of potential rapid growth. To address these risks, the Company must, among other things, develop its customer base; implement
and successfully execute its business and marketing strategy; develop follow-on products; provide superior customer service; and attract,
retain, and motivate qualified personnel. There can be no guarantee that the Company will be successful in addressing these or other such
risks.
Cash and Restricted Cash
The Company considers
all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company had no cash
equivalents at June 30, 2021 or December 31, 2020. Restricted cash at June 30, 2021 represents cash held as collateral for the outstanding
balance on our line of credit.
The Company maintains
cash deposits at several financial institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s
cash balance may at times exceed these limits. At June 30, 2021 and December 31, 2020, the Company had approximately $6.1 million and
$0, respectively, in excess of federally insured limits. The Company continually monitors its positions with, and the credit quality of,
the financial institutions with which it invests.
Deferred Offering Costs
The Company previously capitalized certain legal,
professional accounting and other third-party fees that were directly associated with in-process stock financings as deferred offering
costs until such financings were consummated. After consummation of the Company’s IPO, these costs were recorded as a reduction
to additional paid-in capital generated as a result of the offering.
Emerging Growth Company Status
The Company is an emerging growth company, as
defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies
can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards
apply to private companies. The Company has elected to use this extended transition period for complying with certain new or revised accounting
standards that have different effective dates for public and private companies.
Note 2 – Revenue Recognition
Legacy platform phase out
From 2014 through 2020, the Company was successful
in deploying its platform across 580 major radio stations and 1.6 million monthly active users. The Company’s legacy product served
the broadcast industry by providing a platform that allows for the delivery of actionable digital ads that are synchronized with broadcast
and streaming audio ads. Broadcasters offer mobile and web digital interfaces to their listeners, typically for their individual stations.
Our Interactive Radio Platform provided mobile and web products that provide end users (listeners) with a visual display of everything
a radio station has played in recent history (referred to as a “station feed”).
In addition to displaying album art for songs
played, and digital insertions for station promotions and programs (e.g., a radio station contest), the station feed also included a digital
element for each audio ad that was played. These interactive, synchronized digital ads generate additional revenue for broadcasters and
allowed for the collection of meaningful advertising analytics which we presented to broadcasters through an analytics dashboard.
The Company began phasing out its Interactive
Radio Platform in early 2020 and ceased operations related to the legacy platform by August 1, 2020. Much of the core technology of this
platform is being leveraged for re-use with our new products, Auddia and Vodacast, currently under development. Furthermore, our well
established relationships with more than a dozen broadcasters through the sales, marketing and digital services operations are being maintained
as we seek to deploy the Auddia App on a national scale.
The Company’s legacy contracts with customers
generally fell within two formats: (1) those that encompass development services, access to the Company’s interactive technology
platform through a hosted business model and the ability to execute placement of spot advertising through the Company’s interactive
technology platform, or (2) contracts exclusively for digital advertising placement of spot ads through the Company’s mobile Apps
and web players. The Company allocated the transaction price to each separate performance obligation as applicable within each contract
based upon their relative selling prices.
Development service fee revenue
Revenue generated from development services were
comprised of services for the development, design and customization of software applications for station branded mobile Apps and web/desktop
players for radio stations. The mobile Apps enabled our customer’s users to interact with the live broadcast and streaming content
while providing attribution to each station and enabling local and national digital monetization capabilities.
The web/desktop player provided a listening platform
that enables full interactive radio capabilities for desktop users that prefer web based listening. The Company determined that the development,
design, build and deployment, configuration, and customization are a bundle of professional services provided to the customer for the
purpose of the Mobile and Web Desktop Apps and were considered a single performance obligation. Revenue was recognized over time as the
services are satisfied and any advanced payments received were not recognized as revenue but instead was recorded in a deferred contract
liability until the customer’s services were satisfied. The Company no longer provides these services.
Platform services fee revenue
Revenue generated from platform services were
comprised of the customer’s use of the Company’s interactive technology platform that includes access rights to use the licensed
software, software hosting, support and maintenance, data tracking analytics, advertising trafficking and monitoring of the mobile App
and web/desktop player applications. The Company determined that the hosting of software, license access, support, training, maintenance
and unspecified periodic upgrades or updates, monitoring hardware, interactive content management, access to content library, data and
analytics dashboard, programming and Ad campaign training were a bundle of product and services that have the same period and pattern
of transfer as the service to access the Company’s Platform and have been treated a single performance obligation. Revenue was recognized
over time as the customer simultaneously receives and consumes the benefits provided by the Company’s platform services. The Company
no longer provides these services.
Advertising revenue
The Company legacy contracts generated advertising
revenue in two distinctive forms: one which was from third party advertisers that placed ads on the Company’s mobile Apps and web
players which were separate customer contracts whereby such advertising access was the only service and performance obligation within
those contracts, and second was ad placements on the same platform but managed by the Company for its customers in connection with its
contracts to provide development services and Platform access services to its customers.
The external advertising revenues were comprised
of local and national interactive spots that were sourced and managed by customers or by third party service providers (such as Google),
whereby the Company received a portion of the dollars spent by the advertiser. In late 2018, the Company decided to move to only internally
managed digital advertising for 2019 and discontinued revenue sharing agreements with clients for advertising sourced by the client. Revenue
was recognized as performance obligations were satisfied on a net basis as the Company was acting as an agent, which generally occurred
as ads were delivered through the platform. We generally recognized revenue based on delivery information from the external providers
campaign trafficking systems.
The internal advertising revenues were comprised
of advertising fees for local and national interactive spot and local or digital only advertising campaign fees that were managed by the
Company. For these advertising spots, the Company retained all the money spent on the advertising campaigns run on the Company’s
interactive platform. Revenue was recognized as performance obligations were satisfied, which generally occurred as ads were delivered
through the platform.
For Interactive and Digital Campaign and Spot
Ad Fees which could include customer digital and interactive spot ad campaigns, interactive spot campaigns, the revenue was recognized
at a point in time under the “as-invoiced” practical expedient, since customer usage driven variability was not required to
be estimated but rather is allocated to the distinct time period in which the variable activity occurred.
Certain customers received platform fee credits
or advertising discounts, which were considered as variable consideration in the determination of the transaction price. These performance
obligations related to the fixed price arrangements were discounted ratably based on their relative standalone selling prices.
The Company no longer provides these services.
Practical expedients and exemptions
We expensed sales commissions when incurred because
the duration of the contracts for which we paid commissions were less than one year. These costs were included in the sales and marketing
line item of our Statements of Operations. Currently the Company does not have any significant acquisition costs which have been incurred
associated with the acquisition of its customer contracts and therefore, no deferred customer acquisition costs have been recorded.
We did not disclose the value of unsatisfied performance
obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at
the amount to which we had the right to invoice for services performed.
The following table presents revenues disaggregated
by revenue source:
Disaggregated revenue table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform Service Fees (hosting services, support, data analytics)
|
|
$
|
–
|
|
|
$
|
34,200
|
|
|
$
|
–
|
|
|
$
|
85,800
|
|
Digital advertising served by 3rd parties
|
|
|
–
|
|
|
|
10,903
|
|
|
|
–
|
|
|
|
24,079
|
|
|
|
$
|
–
|
|
|
$
|
45,103
|
|
|
$
|
–
|
|
|
$
|
109,879
|
|
Note 3 – Balance Sheet Disclosures
Accounts payable and accrued liabilities consist
of the following:
Schedule of accounts payable and accrued liabilities
|
|
|
|
|
|
|
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Accounts payable and accrued expenses
|
|
$
|
394,750
|
|
|
$
|
1,111,621
|
|
Credit cards payable
|
|
|
4,264
|
|
|
|
22,885
|
|
Accrued interest
|
|
|
–
|
|
|
|
364,856
|
|
Wages payable
|
|
|
–
|
|
|
|
53,922
|
|
Accounts payable and accrued liabilities
|
|
$
|
399,014
|
|
|
$
|
1,553,284
|
|
Note 4 – Line of Credit
On April 10, 2018 the Company refinanced its previous
line-of-credit with a different bank and this agreement was amended in July 2019 and March 2021. The available principal balance under
the line of credit is currently $2,000,000, and the outstanding balance accrues interest at a variable rate based on the bank’s
prime rate plus 1% (4.25% at June 30, 2021 and December 31, 2020) but at no time less than 4.0%. Monthly interest payments are required,
with any outstanding principal due on July 10, 2021. Interest expense for the six months ended June 30, 2021 and 2020 was $69,132 and
$146,667, respectively.
The line of credit is collateralized by all assets
of the Company, including $2 million of cash held in a control account at the lender. The Company also maintains a minimum balance at
the lender to cover two months of interest payments. Prior to our IPO, the line of credit was collateralized by $6,000,000 of cash assets
of two shareholders held in control accounts at the lender.
Following the Company’s IPO in February
2021 the line of credit was amended and the Company paid down the outstanding principal balance on its bank line of credit from $6 million
to $2 million and the available principal balance for the line of credit was reduced from $6 million to $2 million. Further, the $6 million
of cash collateral previously provided by the two shareholders was released. As of June 30, 2021, $2.0 million of our cash serves as collateral
for our outstanding balance on the line of credit.
The outstanding balance on the line of credit
at June 30, 2021 and December 31, 2020 was $2,000,000 and $6,000,000, respectively and the line was fully drawn as of June 30, 2021. As
discussed in Note 10, the Company paid off the principal balance of $2,000,000 and terminated the line of credit as of July 8, 2021. The
shareholder who previously provided the $2,000,000 control account had a collateral agreement with the Company which is described in Note
5. This agreement was terminated in March 2021.
Note 5 – Convertible Notes Payable,
Notes Payable to Related Parties and Promissory Notes
Convertible notes payable
During the year ended December 31, 2020 investors
purchased an additional $404,601 of our convertible notes, such that at December 31, 2020 the balance of the convertible notes, including
accrued interest, was $2,295,305. These convertible notes accrued interest at 6.0% per year and were scheduled to mature on December 31,
2021. In conjunction with the February 2021 IPO, the Notes automatically converted into 2,066,176 shares of common stock at discounts
ranging from 50% to 75% of the IPO price. Interest expense for the six months ended June 30, 2021 and 2020 was $16,586 and $63,741, respectively.
Accrued fees to a related party
The Company had an agreement with a shareholder
to provide collateral for a bank line of credit described in Note 4 – Line of Credit. The amount of the cash collateral provided
by the shareholder to the bank was $2.0 million. The collateral agreement required a commitment to pay collateral fees of $710,000 (comprised
of annual interest of $660,000 plus the $50,000 renewal fee) to the shareholder and issue 3,454 common stock warrants. In January 2019,
in connection with the collateral agreement, the Company converted accrued fees of $725,000 into an unsecured note payable, which bore
interest at 33% annually and had a maturity date of December 31, 2021. The fees that accrued on the collateral arrangement were 33% percent
of the collateral amount annually plus an annual renewal fee of $50,000. Interest expense for the six months ended June 30, 2021 and 2020
was $208,727 and $655,175, respectively. The balance outstanding on the accrued collateral fees was $1,960,336 at December 31, 2020, excluding
the $725,000 unsecured note payable. This collateral agreement terminated in March 2021.
In conjunction with the February 2021 IPO, the
notes payable and accrued interest due to this shareholder were converted to 1,667,859 shares of common stock.
Promissory notes payable
During the twelve months ended December 31, 2020,
the Company issued, to a number of existing shareholders, in four separate tranches, $1,857,764 of Promissory Notes that accrue interest
at a rate of 6% per year and were scheduled to mature on December 31, 2021. When issued, the notes incorporated the following attributes:
interest on the Notes accrue at 6% and upon the successful completion of a qualified IPO by December 31, 2021, the notes and accrued interest
would convert into equity at a per share valuation equal to $40.0 million. In addition, each investor in the Promissory Notes would receive
shares and warrants based on a formula that takes into account the number of shares and warrants the investor owned before the investment
in these Promissory Notes, as well as a portion of the bonus allocation of 1,038,342 shares made available to the investors. Interest
expense for the six months ended June 30, 2021 and 2020 was $14,454 and $7,125, respectively.
In conjunction with the February 2021 IPO, all
of the Promissory Notes converted into 3,080,535 shares of common stock.
The Company recognized a finance charge to interest
expense of $8,141,424 related to the conversion of the convertible notes, notes payable to related parties and promissory notes during
the six months ended June 30, 2021.
Note 6 – Notes Payable
Notes payable to related parties and deferred
salary
An executive officer of the Company agreed to
defer receipt of compensation to preserve liquidity in the Company. The accumulated amount of compensation owed to this executive officer
was approximately $631,000 at December 31, 2020. The Company paid this deferred compensation in the first quarter of 2021.
During 2019, the Company issued notes payable
(the "Notes") to three related parties for $80,000, $200,000 and $50,000, respectively. The Notes did not accrue interest or
have a stated maturity date. The outstanding note payable for $80,000 was repaid in January 2020. In December 2019, the two other note
holders elected to convert their notes into convertible Notes due December 31, 2021. Two other existing investors, who were owed a total
of $17,197 for services by the Company, also agreed to convert their payables into convertible Notes. During 2019 the Company issued a
note payable to a related party for consulting services incurred by the Company in the amount of $486,198. As of December 31, 2020, the
outstanding balance for consulting services was $440,904.
In October 2019, a shareholder obtained $400,000
of short term financing from an unrelated lender. The shareholder then agreed to make the proceeds of that short term financing available
to the Company. In exchange, the Company assumed responsibility for all payments and charges (including principal, interest and fees)
required under such short term financing agreement. Under the agreement the Company was advanced $188,000, net of $12,000 in closing fees,
and the remaining $200,000 was put into an escrow account owned and controlled by the shareholder. A loan financing fee in the amount
of $100,000 was due upon maturity, of which the amount relating to 2019 of $75,000 was included in accrued expenses at December 31, 2019.
In December 2019, the Company made a principal payment in the amount of $57,203, and accordingly, the outstanding principal balance was
$142,797 at December 31, 2019, and was included in Notes payable to related parties on the balance sheet. The remaining balance of $242,797
which included principal and loan financing fees, was repaid in January 2020.
In February 2020, the Company obtained a new $500,000
short term loan from the same related party. The Company was advanced $485,000, net of $15,000 in closing fees, and immediately placed
$140,741 into an escrow account, owned and controlled by the shareholder to provide funds for the scheduled repayments. Repayment of the
principal and loan financing fee occurs through weekly payments of $17,593 until the loan and financing fee is paid in full. The loan
financing fee increases with the length of the payback period and was maximized at $165,000 after month five. The outstanding balance
was repaid in February 2021.
Cares Act Paycheck Protection Program loan
In April 2020, the Company entered into a promissory
note evidencing an unsecured loan (the “First Loan”) in the amount of $268,662 made to the Company under the Paycheck Protection
Program (the “PPP”). In January 2021, the Company entered into a second promissory note (the “Second Loan” or
combined with the first loan, the “PPP Loans”) of $267,482 under the PPP. The PPP was established under the CARES Act and
is administered by the U.S. Small Business Administration.
The First Loan was set to mature in April 2022 and the Second Loan matures in January 2023. The PPP Loans bear interest at a rate of 1% per annum. Beginning November 2020, the Company was required to make 18 monthly payments of principal and interest in the amount of $14,370 related to the First Loan. The PPP Loans may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The proceeds from the Loans may only be used for payroll costs (including benefits), interest on mortgage obligations, rent, utilities and interest on certain other debt obligations.
The PPP Loans contain customary events of default
relating to, among other things, payment defaults, making materially false and misleading representations to the lender or breaching the
terms of the Loan documents. The occurrence of an event of default will result in an increase in the interest rate to 18% per annum and
provides the lender with customary remedies, including the right to require immediate payment of all amounts owed under the PPP Loans.
Pursuant to the terms of the CARES Act and the
PPP, the Company applied for forgiveness for the First Loan. On June 15, 2021, the Company received confirmation that the First Loan was
approved for forgiveness and the Company recorded $268,662 in PPP loan extinguishment to other income during the three and six months
ended June 30, 2021. The Company plans to apply to the lender for forgiveness for the amount due on the Second Loan. The amount eligible
for forgiveness is based on the amount of Loan proceeds used by the Company (during the eight-week period after the lender makes the first
disbursement of Loan proceeds) for the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage
obligations, rent and utilities, subject to certain limitations and reductions in accordance with the CARES Act and the PPP. While the
Company expects 100% of the Second Loan to be forgiven, no assurance can be given that the Company will obtain forgiveness of the Second
Loan in whole or in part.
Note 7 – Commitments and Contingencies
Operating Lease
In April 2021, the Company entered into a lease
agreement for a new primary office space in Boulder, Colorado comprising of 8,639 square feet. The lease commenced on May 15, 2021 and
terminates after 12 months. The lease has an initial base rent of $7,150 per month, with the first 15 days rent free and includes three
separate six month renewal options, subject to fixed rate escalation increases. The Company previously leased approximately 3,000 square
feet of office space that expired on April 30, 2021. Rent expense was as follows:
Schedule of rent expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30
|
|
|
Six Months Ended June 30
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Rent expense
|
|
$
|
13,437
|
|
|
|
17,596
|
|
|
$
|
31,490
|
|
|
|
36,234
|
|
Litigation
In the normal course of business, the Company
is party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such
litigation will not have a material adverse effect on the Company.
Note 8 - Share-based Issuances
Stock Options
The following table presents the activity for
stock options outstanding:
Schedule of stock option activity
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Non-Qualified
|
|
Average
|
|
|
|
Options
|
|
Exercise Price
|
|
Outstanding - December 31, 2020
|
|
300,353
|
|
$
|
3.65
|
|
Granted
|
|
–
|
|
|
–
|
|
Forfeited/canceled
|
|
3,062
|
|
$
|
3.68
|
|
Exercised
|
|
–
|
|
|
–
|
|
Outstanding – June 30, 2021
|
|
297,291
|
|
$
|
3.65
|
|
The following table presents the composition
of options outstanding and exercisable:
Options outstanding and exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
|
Options Exercisable
|
|
Exercise Prices
|
|
|
Number
|
|
|
|
Price*
|
|
|
|
Life*
|
|
|
|
Number
|
|
|
|
Price*
|
|
$2.70
|
|
|
68,518
|
|
|
|
$2.70
|
|
|
|
2.33
|
|
|
|
68,518
|
|
|
|
$2.70
|
|
$2.90
|
|
|
54,941
|
|
|
|
$2.89
|
|
|
|
6.54
|
|
|
|
54,941
|
|
|
|
$2.89
|
|
$4.26
|
|
|
173,832
|
|
|
|
$4.25
|
|
|
|
8.13
|
|
|
|
136,534
|
|
|
|
$4.25
|
|
Total - June 30,
2021
|
|
|
297,291
|
|
|
|
$3.65
|
|
|
|
6.50
|
|
|
|
259,993
|
|
|
|
$3.56
|
|
________________________
* Price and Life reflect the weighted average exercise price and weighted
average remaining contractual life, respectively.
Warrants
The following table presents the activity for
warrants outstanding:
Schedule of warrant activity
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Warrants
|
|
|
Average
|
|
|
|
Outstanding
|
|
|
Exercise Price
|
|
Outstanding - December 31, 2020
|
|
|
358,334
|
|
|
$
|
7.02
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
4,909,936
|
|
|
$
|
4.58
|
|
Forfeited/cancelled/restored
|
|
|
–
|
|
|
|
–
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
Outstanding – June 30, 2021
|
|
|
5,268,270
|
|
|
$
|
4.74
|
|
In connection with the February 2021 IPO, the
Company issued 3,991,818 warrants to purchase shares of common stock and issued to 598,772 warrants to its underwriters to cover over-allotments.
The Company also issued 319,346 of representative warrants to its underwriters to purchase shares of common stock and these representative
warrants contain a cashless exercise feature. All of the outstanding warrants are exercisable and have a weighted average remaining contractual
life of approximately 4.48 years as of June 30, 2021.
Note 9 – Net Loss Per Share
Basic net loss per share is computed by dividing
net loss, which is allocated based upon the proportionate amount of weighted average shares outstanding, to each class of stockholder’s
stock outstanding during the period. For the calculation of diluted net loss per share, net loss per share attributable to common stockholders
for basic net loss per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans.
As of June 30, 2021 and 2020, 4,239,600 shares
and 651,437 shares, respectively of potentially dilutive weighted average shares were excluded from the calculation of diluted net loss
per share because their effect would have been anti-dilutive for the periods presented.
Note 10 – Subsequent Events
In July 2021, the Company received cash proceeds of approximately $5.0
million related to the exercise of Series A Warrants to purchase 1,091,692 shares of Common Stock.
In July 2021, the Company paid off the $2 million outstanding balance
on its line of credit, which released from restriction its restricted cash balance. The line of credit has been terminated.
In July 2021, the Company finalized development and testing of the
Minimally Viable Product (“MVP”) version of the Auddia App and launched its first consumer trial. The Company plans to commence
amortization of its capitalized development costs.