Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 14, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-40071 | |
Entity Registrant Name | AUDDIA INC. | |
Entity Central Index Key | 0001554818 | |
Entity Tax Identification Number | 45-4257218 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 5775 Central Ave., Suite C | |
Entity Address, City or Town | Boulder | |
Entity Address, State or Province | CO | |
Entity Address, Country | US | |
Entity Address, Postal Zip Code | 80301 | |
City Area Code | 303 | |
Local Phone Number | 886-7867 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | AUUD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,291,829 |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 6,162,647 | $ 117,914 |
Restricted cash | 2,000,000 | 0 |
Accounts receivable, net | 0 | 128 |
Total current assets | 8,162,647 | 118,042 |
Non-current assets: | ||
Property and equipment, net of accumulated depreciation of $689,306 and $687,123 | 20,148 | 12,289 |
Software development costs, net of accumulated amortization of $1,388,943 and $1,388,943 | 2,129,593 | 1,837,518 |
Deferred offering costs | 0 | 338,419 |
Prepaids and other non-current assets | 134,465 | 5,500 |
Total non-current assets | 2,284,206 | 2,193,726 |
Total assets | 10,446,853 | 2,311,768 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 616,853 | 1,553,284 |
Line-of-credit | 2,000,000 | 6,000,000 |
Convertible notes payable | 0 | 2,146,775 |
Notes payable to related parties and deferred salary | 0 | 1,628,197 |
Promissory Notes Payable | 0 | 1,857,764 |
PPP Loan | 536,144 | 268,662 |
Accrued fees to a related party | 0 | 1,960,336 |
Total current liabilities | 3,152,997 | 15,415,018 |
Commitments and contingencies | ||
Deficiency in shareholders' equity: | ||
Preferred stock - $0.001 par value, 10,000,0000 authorized and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020 | 0 | 0 |
Common stock - $0.001 par value, 100,000,000 authorized and 11,291,829 and 485,441 shares issued and outstanding at March 31, 2021 and December 31, 2020 | 11,292 | 486 |
Additional paid-in capital | 67,939,382 | 38,256,584 |
Accumulated deficit | (60,656,818) | (51,360,320) |
Total shareholders' equity (deficit) | 7,293,856 | (13,103,250) |
Total liabilities and deficiency in shareholders' equity | $ 10,446,853 | $ 2,311,768 |
Condensed Balance Sheets (Una_2
Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 11,291,829 | 485,441 |
Common stock, shares outstanding | 11,291,829 | 485,441 |
Accumulated depreciation | $ 689,306 | $ 687,123 |
Accumulated amortization of capitalized software | $ 1,388,943 | $ 1,388,943 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Revenue | $ 0 | $ 64,776 |
Operating expenses: | ||
Direct cost of services | 57,394 | 138,663 |
Sales and marketing | 123,458 | 97,104 |
Research and development | 46,997 | 44,555 |
General and administrative | 639,891 | 616,897 |
Total operating expenses | 867,740 | 897,219 |
Loss from operations | (867,740) | (832,443) |
Other (expense) income: | ||
Finance charge - convertible debt | (8,141,424) | 0 |
Interest expense | (287,439) | (400,548) |
Interest income | 105 | 0 |
Total other expense | (8,428,758) | (400,548) |
Net loss before income taxes | (9,296,498) | (1,232,991) |
Income taxes | 0 | 0 |
Net loss | $ (9,296,498) | $ (1,232,991) |
Net loss per share attributable to common shareholders: Basic and diluted | $ (1.72) | $ (2.62) |
Weighted average common shares outstanding: Basic and diluted | 5,408,351 | 470,658 |
Condensed Statement of Changes
Condensed Statement of Changes in Shareholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Subscription Receivable | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2019 | 470,658 | ||||
Beginning balance, value at Dec. 31, 2019 | $ 471 | $ 38,122,486 | $ (42,735) | $ (47,309,099) | $ (9,228,877) |
Collection of subscription receivable | 42,735 | 42,735 | |||
Share-based compensation | 18,055 | 18,055 | |||
Net loss | (1,232,991) | ||||
Ending balance, shares at Mar. 31, 2020 | 470,658 | ||||
Ending balance, value at Mar. 31, 2020 | $ 471 | 38,140,541 | 0 | (48,542,090) | (10,401,078) |
Beginning balance, shares at Dec. 31, 2020 | 485,441 | ||||
Beginning balance, value at Dec. 31, 2020 | $ 486 | 38,256,584 | 0 | (51,360,320) | (13,103,250) |
Stock issued new, shares | 3,991,818 | ||||
Stock issued new, value | $ 3,992 | 14,480,048 | 14,484,040 | ||
Conversion of debt obligations, shares | 6,814,570 | ||||
Conversion of debt obligations, value | $ 6,814 | 15,186,619 | 15,193,433 | ||
Share-based compensation | 16,131 | 1,631 | |||
Net loss | (9,296,498) | (9,296,498) | |||
Ending balance, shares at Mar. 31, 2021 | 11,291,829 | ||||
Ending balance, value at Mar. 31, 2021 | $ 11,292 | $ 67,939,382 | $ 0 | $ (60,656,818) | $ 7,293,856 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss | $ (9,296,498) | $ (1,232,991) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Finance charge associated with debt to equity conversion | 8,141,424 | 0 | |
Depreciation and amortization | 2,183 | 185,175 | |
Share-based compensation | 16,131 | 18,055 | |
Issuance of common stock for consulting services | 0 | 43,760 | |
Change in assets and liabilities: | |||
Accounts receivable | 128 | 5,893 | |
Prepaids and other non-current assets | (128,965) | 0 | |
Accounts payable and accrued liabilities | (561,858) | 450,012 | |
Net cash used in operating activities | (1,827,455) | (530,096) | |
Cash flows from investing activities: | |||
Software capitalization | (292,075) | (194,452) | |
Purchase of property and equipment | (10,042) | (2,686) | |
Net cash used in investing activities | (302,117) | (197,138) | |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock | 14,822,459 | 0 | |
Repayments of related party debt and deferred salary | (930,636) | (222,797) | |
Repayments of line of credit | (4,000,000) | 0 | |
Proceeds from issuance of PPP Loan | 267,482 | 0 | |
Proceeds from issuance of promissory notes payable | 15,000 | 0 | |
Deferred offering costs capitalized | 0 | (62,004) | |
Proceeds from issuance of convertible notes payable | 0 | 763,860 | |
Subscription receivable | 0 | 42,736 | |
Net cash provided by financing activities | 10,174,305 | 521,795 | |
Net (decrease) increase in cash and restricted cash | 8,044,733 | (205,439) | |
Cash and restricted cash, beginning of period | 117,914 | 290,230 | $ 290,230 |
Cash and restricted cash, end of period | 8,162,647 | 84,791 | $ 117,914 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 138,792 | 182,969 | |
Cash paid for income taxes | 0 | 0 | |
Supplemental disclosures for non-cash activity | |||
Shares issued for conversion of indebtedness | $ 6,814,570 | $ 0 |
1. Description of Business, Bas
1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business, Basis of Presentation and Summary of Significant Accounting Policies | 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. On January 14, 2012, Clip Interactive, LLC was formed as a Colorado limited liability company 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. After deducting underwriters commissions and expenses, the Company received net proceeds of approximately $15.1 million and its common stock started 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. Effective 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 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 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 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 March 31, 2021 or December 31, 2020. Restricted cash at March 31, 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 March 31, 2021 and December 31, 2020, the Company had approximately $7.7 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 capitalized certain legal, professional accounting and other third-party fees that are directly associated with in-process stock financings as deferred offering costs until such financings were consummated. After consummation of the equity financing, 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. |
2. Revenue Recognition
2. Revenue Recognition | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 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 provides 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 includes 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 present 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 at 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 is no longer providing these services. Contract assets and liabilities The Company had no contract assets or contract liabilities at March 31, 2021 or December 31, 2020. The Company does not have any customer contracts, as the Company no longer provides the services mentioned above. 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 do 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 have the right to invoice for services performed. The following table presents revenues disaggregated by revenue source: Three Months Ended March 31, 2021 2020 Revenues: Platform Service Fees (hosting services, support, data analytics) $ – $ 51,600 Digital advertising served by 3 rd – 13,176 $ – $ 64,776 |
3. Balance Sheet Disclosures
3. Balance Sheet Disclosures | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Balance Sheet Disclosures | Note 3 – Balance Sheet Disclosures Accounts payable and accrued liabilities consist of the following: March 31, December 31, Accounts payable and accrued expenses $ 614,478 $ 1,111,621 Credit cards payable 2,375 22,885 Accrued interest – 364,856 Wages payable – 53,922 $ 616,853 $ 1,553,284 |
4. Line of Credit
4. Line of Credit | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Line of Credit | Note 4 – Line of Credit The Company entered into a line of credit with a bank originally dated November 7, 2012 and amended it on November 5, 2016. On April 10, 2018 the Company refinanced its line-of-credit with a different bank and amended this agreement 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% (3.75% at March 31, 2021 and March 31, 2020) but at no time less than 4.0%. Monthly interest payments are required, with any outstanding principal due on July 10, 2021. 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 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. As of March 31, 2021, $2.0 million of our cash serves as collateral for our outstanding balance on the line of credit. The $6 million of cash collateral previously provided by two shareholders was released. The outstanding balance on the line of credit at March 31, 2021 and December 31, 2020 was $2,000,000 and $6,000,000, respectively and the line was fully drawn as of March 31, 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 terminated in March 2021. |
5. Convertible Notes Payable
5. Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 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. 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 bears interest at 33% annually and had a maturity date of December 31, 2021. The fees accruing on the collateral arrangement are 33% percent of the collateral amount annually plus an annual renewal fee of $50,000. Interest expense for the three months ended March 31, 2021 and 2020 was $120,381 and $212,952, 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 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 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. In conjunction with the February 2021 IPO, all 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 three months ended March 31, 2021. |
6. Notes Payable
6. Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Notes Payable | 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 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 is due upon maturity, of which the amount relating to 2019 of $75,000 is 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 is 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 is 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 matures 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 is 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 Loan 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 plans to apply to the lender for forgiveness for the amount due on the PPP Loans, which it has already initiated. 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 loan to be forgiven, no assurance can be given that the Company will obtain forgiveness of the PPP Loans in whole or in part. |
7. Commitments and Contingencie
7. Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 – Commitments and Contingencies Operating Lease The Company leases approximately 3,000 square feet of office space under a non-cancelable operating sublease. Rent expense was $18,053 and $18,639 for the three months ended March 31, 2021 and 2020, respectively. In October 2019, the Company entered into a new sublease, with monthly rent of $5,000 plus a pro-rata share of utilities. In October 2020, the Company renewed this sublease for an additional seven months, on the same terms, which will expire on April 30, 2021. We recently entered into a new sublease for a new principal office and is discussed in more detail in Note 10. 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. Collateral Fees The Company previously had a commitment to pay annual collateral fees as described in Note 6. This commitment terminated in March 2021. |
8. Share-Based Compensation
8. Share-Based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Share-Based Compensation | Note 8 - Share-based Compensation Stock Options The following table presents the activity for stock options outstanding: Weighted Non-Qualified Average Options Exercise Price Outstanding - December 31, 2020 300,353 $ 3.65 Granted – – Forfeited/canceled – $ – Exercised – – Outstanding - March 31, 2021 300,353 $ 3.65 The following table presents the composition of options outstanding and exercisable: Options Outstanding Options Exercisable Exercise Prices Number Price* Life* Number Price* $2.70 68,518 $2.70 2.58 68,518 $2.70 $2.90 56,236 $2.89 6.79 56,236 $2.89 $4.26 175,599 $4.25 8.38 133,833 $4.25 Total - March 31, 2021 300,353 $3.65 6.76 258,587 $3.55 ________________________ * 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: Weighted Warrants Average Outstanding Exercise Price Outstanding - December 31, 2020 358,334 $7.02 Granted 4,590,590 $4.54 Forfeited/cancelled/restored – – Exercised – – Outstanding - March 31, 2021 4,948,924 $4.72 In connection with the February 2021 IPO, the Company issued 3,991,818 warrants to purchase shares of common stock. The Company also issued to its underwriters 598,772 warrants to cover over-allotments. All of the outstanding warrants are exercisable and have a weighted average remaining contractual life of approximately 4.79 years as of March 31, 2021. |
9. Net Loss Per Share
9. Net Loss Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 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 March 31, 2021 and 2020, 2,750,331 shares and 644,751 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. |
10. Subsequent Events
10. Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 – Subsequent Events In April 2021, the Company entered into a lease agreement for a new primary office space in Boulder, CO comprising of 8,639 square feet. The lease will begin 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. |
1. Description of Business, B_2
1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business | 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. On January 14, 2012, Clip Interactive, LLC was formed as a Colorado limited liability company 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. After deducting underwriters commissions and expenses, the Company received net proceeds of approximately $15.1 million and its common stock started 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. Effective 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 financial statements. |
Basis of Presentation | 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 | 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 | Use of Estimates The preparation of 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 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 | 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 | 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 | 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 March 31, 2021 or December 31, 2020. Restricted cash at March 31, 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 March 31, 2021 and December 31, 2020, the Company had approximately $7.7 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 | Deferred Offering Costs The Company capitalized certain legal, professional accounting and other third-party fees that are directly associated with in-process stock financings as deferred offering costs until such financings were consummated. After consummation of the equity financing, these costs were recorded as a reduction to additional paid-in capital generated as a result of the offering. |
Emerging Growth Company Status | 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. |
2. Revenue Recognition (Tables)
2. Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated revenue table | The following table presents revenues disaggregated by revenue source: Three Months Ended March 31, 2021 2020 Revenues: Platform Service Fees (hosting services, support, data analytics) $ – $ 51,600 Digital advertising served by 3 rd – 13,176 $ – $ 64,776 |
3. Balance Sheet Disclosures (T
3. Balance Sheet Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued liabilities | Accounts payable and accrued liabilities consist of the following: March 31, December 31, Accounts payable and accrued expenses $ 614,478 $ 1,111,621 Credit cards payable 2,375 22,885 Accrued interest – 364,856 Wages payable – 53,922 $ 616,853 $ 1,553,284 |
8. Share-Based Compensation (Ta
8. Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of stock option activity | The following table presents the activity for stock options outstanding: Weighted Non-Qualified Average Options Exercise Price Outstanding - December 31, 2020 300,353 $ 3.65 Granted – – Forfeited/canceled – $ – Exercised – – Outstanding - March 31, 2021 300,353 $ 3.65 |
Options outstanding and exercisable | The following table presents the composition of options outstanding and exercisable: Options Outstanding Options Exercisable Exercise Prices Number Price* Life* Number Price* $2.70 68,518 $2.70 2.58 68,518 $2.70 $2.90 56,236 $2.89 6.79 56,236 $2.89 $4.26 175,599 $4.25 8.38 133,833 $4.25 Total - March 31, 2021 300,353 $3.65 6.76 258,587 $3.55 ________________________ * Price and Life reflect the weighted average exercise price and weighted average remaining contractual life, respectively. |
Schedule of warrant activity | The following table presents the activity for warrants outstanding: Weighted Warrants Average Outstanding Exercise Price Outstanding - December 31, 2020 358,334 $7.02 Granted 4,590,590 $4.54 Forfeited/cancelled/restored – – Exercised – – Outstanding - March 31, 2021 4,948,924 $4.72 |
1. Description of Business, B_3
1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 2 Months Ended | ||
Feb. 28, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
Cash equivalents | $ 0 | $ 0 | |
Cash uninsured | $ 7,700,000 | $ 0 | |
I P O [Member] | |||
Unit description | One share of common stock and one warrant | ||
Stock sold new, shares | 3,991,818 | ||
Warrants issued | 3,991,818 | ||
Proceeds from IPO | $ 15,100,000 | ||
Stock issued for conversion of notes | 6,814,570 | ||
I P O [Member] | Warrants [Member] | |||
Warrant exercise price | $ 4.54 | ||
I P O [Member] | Warrants [Member] | Underwriters [Member] | |||
Warrants issued | 598,772 |
2. Revenue Recognition (Details
2. Revenue Recognition (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | $ 0 | $ 64,776 |
Platform Service Fees [Member] | ||
Revenues | 0 | 51,600 |
Digital Advertising - 3rd Parties [Member] | ||
Revenues | $ 0 | $ 13,176 |
2. Revenue Recognition (Detai_2
2. Revenue Recognition (Details Narrative) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 0 | $ 0 |
Contract liabilities | $ 0 | $ 0 |
3. Balance Sheet Disclosures (D
3. Balance Sheet Disclosures (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accounts payable and accrued expenses | $ 614,478 | $ 1,111,621 |
Credit cards payable | 2,375 | 22,885 |
Accrued interest | 0 | 364,856 |
Wages payable | 0 | 53,922 |
Accounts payable and accrued liabilities | $ 616,853 | $ 1,553,284 |
4. Line of Credit (Details Narr
4. Line of Credit (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | ||
Credit line maximum borrowing capacity | $ 2,000,000 | |
Credit line interest rate terms | Bank's prime rate plus 1% | |
Credit line interest rate at period end | 3.75% | |
Credit line expiration date | Jul. 10, 2021 | |
Credit line amount outstanding | $ 2,000,000 | $ 6,000,000 |
5. Convertible Notes Payable (D
5. Convertible Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | |
Jan. 31, 2019 | Feb. 16, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Proceeds from convertible notes | $ 0 | $ 763,860 | |||
Interest expense | 8,141,424 | 0 | |||
Finance charge associated with debt to equity conversion | 8,141,424 | 0 | |||
Collateral Agreement [Member] | |||||
Convertible notes payable | $ 725,000 | ||||
Debt stated interest rate | 33.00% | ||||
Debt maturity date | Dec. 31, 2021 | ||||
Debt converted, shares issued | 1,667,859 | ||||
Interest expense | $ 120,381 | $ 212,952 | |||
Outstanding collateral fees | $ 1,960,336 | ||||
Convertible Notes Payable [Member] | |||||
Convertible notes payable | 2,295,305 | ||||
Proceeds from convertible notes | $ 404,601 | ||||
Debt stated interest rate | 6.00% | ||||
Debt maturity date | Dec. 31, 2021 | ||||
Debt converted, shares issued | 2,066,176 | ||||
Promissory Notes Payable [Member] | |||||
Debt stated interest rate | 6.00% | ||||
Debt maturity date | Dec. 31, 2021 | ||||
Debt converted, shares issued | 3,080,535 | ||||
Promissory notes payable | $ 1,857,764 |
6. Notes Payable (Details Narra
6. Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | ||
Jan. 31, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Apr. 30, 2020 | Dec. 31, 2020 | |
Deferred compensation | $ 0 | $ 631,000 | |||
Proceeds from issuance of PPP Loan | $ 267,482 | $ 0 | |||
PPP Loan [Member] | |||||
Proceeds from issuance of PPP Loan | $ 267,482 | $ 268,662 |
7. Commitments and Contingenc_2
7. Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 18,053 | $ 18,639 |
8. Share-Based Compensation (De
8. Share-Based Compensation (Details - Option Activity) - Options [Member] | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Options outstanding, beginning | 300,353 |
Options granted | 0 |
Options forfeited/canceled | 0 |
Options exercised | 0 |
Options outstanding, ending balance | 300,353 |
Weighted average exercise price, beginning | $ / shares | $ 3.65 |
Weighted average exercise price, ending | $ / shares | $ 3.65 |
8. Share-Based Compensation (_2
8. Share-Based Compensation (Details - Options by Exercise Price) - Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Mar. 31, 2021 | |
Options outstanding | 300,353 | 300,353 |
Weighted average exercise price - options outstanding | $ 3.65 | $ 3.65 |
Weighted average contractural term | 6 years 9 months 3 days | |
Options exercisable | 258,587 | |
Weighted average exercise price - options exercisable | $ 3.65 | |
$2.70 [Member] | ||
Options outstanding | 65,518 | |
Weighted average exercise price - options outstanding | $ 2.70 | |
Weighted average contractural term | 2 years 6 months 29 days | |
Options exercisable | 68,518 | |
Weighted average exercise price - options exercisable | $ 2.70 | |
$2.90 [Member] | ||
Options outstanding | 56,236 | |
Weighted average exercise price - options outstanding | $ 2.89 | |
Weighted average contractural term | 6 years 9 months 14 days | |
Options exercisable | 56,236 | |
Weighted average exercise price - options exercisable | $ 2.89 | |
$4.26 [Member] | ||
Options outstanding | 175,599 | |
Weighted average exercise price - options outstanding | $ 4.25 | |
Weighted average contractural term | 8 years 4 months 17 days | |
Options exercisable | 133,833 | |
Weighted average exercise price - options exercisable | $ 4.25 |
8. Share-Based Compensation (_3
8. Share-Based Compensation (Details - Warrant Activity) - Warrants [Member] | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Warrants outstanding, beginning | 358,334 |
Warrants granted | 4,590,590 |
Warrants forfeited/cancelled/restored | 0 |
Warrants exercised | 0 |
Warrants outstanding, ending | 4,948,924 |
Weighted average exercise price, beginning | $ / shares | $ 7.02 |
Weighted average exercise price, granted | $ / shares | 4.54 |
Weighted average exercise price, ending | $ / shares | $ 4.72 |
8. Share-Based Compensation (_4
8. Share-Based Compensation (Details Narrative) - Warrants [Member] | 3 Months Ended |
Mar. 31, 2021shares | |
Warrants remaining contractural life | 4 years 9 months 14 days |
Warrants granted | 4,590,590 |
I P O [Member] | |
Warrants granted | 3,991,818 |
I P O [Member] | Underwriters [Member] | |
Warrants granted | 598,772 |
9. Net Loss Per Share (Details
9. Net Loss Per Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares excluded from net loss per share calculation | 2,750,331 | 644,751 |