Auddia (AUUD) risk factors, FY2025 10-K

Risks Related to the proposed merger with Thramann Holdings

1. 01The merger with Thramann Holdings and the resulting change in control from such merger must be approved by Auddia stockholders. Failure to obtain stockholder approval would prevent the closing of the Thramann Holdings mergerNew
2. 02Failure to complete the merger may result in Auddia paying a termination fee to Thramann Holdings, and could harm the common stock price and future business and operations of AuddiaNew
3. 03If the conditions to the merger are not satisfied or waived, the merger may not occurNew
4. 04Auddia stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the mergerNew
5. 05Auddia’s stockholders will generally have a reduced ownership and voting interest in, and will exercise less influence over the management of, the holding company following the completion of the merger as compared to their current ownership and voting interests in AuddiaNew

Risks related to our financial position and need for additional capital

1. 06Our auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain further financing43% rewritten
2. 07We have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability32% rewritten
3. 08We will need additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this capital when needed may force us to delay, limit or terminate our product development efforts or other operations28% rewritten
4. 09Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies and product candidates
5. 10We have generated historical revenue from our mobile app platform for radio stations, but future revenue growth is dependent on new software services
6. 11Our limited operating history of our current business plan may make it difficult for investors to evaluate the success of our business to date and to assess our future viability
7. 12If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired, which would adversely affect our business

Risks related to the development of our products

1. 13Our subscription revenue margins and our freedom to operate our faidr radio platform rely on continuity of the established music licensing framework
2. 14Our faidr platform will rely on the established “personal use exemption” which allows individuals to record content for time-shifting purposes
3. 15Real or perceived errors, failures or bugs in our platform or products could materially and adversely affect our operating results and growth prospects

Risks related to our proposed merger with Thramann Holdings

1. 16Our recently announced growth strategy includes seeking acquisitions of other companies or assets in our industry sector. We may not be successful in identifying, making and integrating business or asset acquisitions, if any, in the future
2. 17Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel
3. 18If we are unable to manage expected growth in the scale and complexity of our operations, our performance may suffer
4. 19Any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business
5. 20Changing regulations and increased awareness relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and harm our brand
6. 21Our business depends on a strong brand, and if we are not able to develop, maintain and enhance our brand, our business and operating results may be harmed. Moreover, our brand and reputation could be harmed if we were to experience significant negative publicity
7. 22Enacted and future legislation may increase the difficulty and cost for us to commercialize our product candidates and may affect the prices we may set
8. 23We may be subject to litigation, disputes or regulatory inquiries for a variety of claims, which could adversely affect our results of operations, harm our reputation or otherwise negatively affect our business

Risks related to our intellectual property

1. 24Our business is subject to the risks of earthquakes, fire, floods and other natural catastrophic events, and to interruption by man-made problems such as power disruptions, computer viruses, cyberattack, data security breaches or terrorism
2. 25Any failure to protect our intellectual property rights could impair our business
3. 26If third parties claim that we infringe upon or otherwise violate their intellectual property rights, our business could be adversely affected
4. 27Our use of “open source” software could negatively affect our ability to offer and sell access to our platform and products and subject us to possible litigation
5. 28Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses

Risks related to ownership of our common stock

1. 29A significant portion of our total outstanding shares are eligible for sale into the public market. Substantial sales of our shares into the public market could cause the market price of our common stock to drop significantly, even if our business is performing well31% rewritten
2. 30We have an equity line facility with White Lion. During 2025, the Company has sold 995,000 shares to White Lion for total proceeds of approximately $3.7 million75% rewritten
3. 31We also have an At-the-Market (“ATM”) facility with Ascendiant Capital Markets, LLC, as sales agent (the “Agent”). Under the ATM facility, we may sell shares of our common stock having an aggregate offering price of up to $10,000,000 from time to time, through an “at the market offering” (the “ATM Offering”)New
4. 32Shares issued by us through our equity line or ATM facilities may result in substantial dilution to the interests of holders of our common stockNew
5. 33The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for investors in our securities
6. 34If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline
7. 35We may not be able to satisfy the requirements for the continued listing of our common stock on Nasdaq47% rewritten
8. 36On April 14, 2025, Nasdaq notified us that we were in compliance with the $1.00 minimum bid price requirementNew
9. 37We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors
10. 38As a public company, and particularly after we are no longer an EGC, we will incur significant legal, accounting and other expenses that we did not incur as a private company
11. 39Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price
12. 40Provisions in our corporate charter and our bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management
13. 41Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain
14. 42Our charter provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for such disputes with us or our directors, officers or employees