| PROSPECTUS |
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-279683 |
AUDDIA INC.
Up to 5,905,898 Shares of Common Stock
This prospectus relates
to the offer and resale, from time to time, of up to an aggregate of 5,905,898 shares of our common stock, par value $0.001 per share,
consisting of, (a) up to 4,655,761 shares of common stock issuable upon conversion of our Series B Convertible Preferred Stock, par value
$0.001 per share (the “Series B Convertible Preferred Stock”) and (b) up to 1,250,137 shares of common stock issuable upon
the exercise of warrants (the “Common Warrants”), each sold in a private investment in public equity financing (the “PIPE
Offering”) pursuant to a Securities Purchase Agreement, dated April 23, 2024 (the “2024 SPA”), by and between us and
the purchasers named therein (the “Selling Stockholders”).
We are not selling any securities under this prospectus,
and we will not receive proceeds from the sale of the shares of our common stock by the Selling Stockholders. However, we may receive
proceeds from the cash exercise of the Common Warrants, which, if exercised in cash at the current applicable exercise price, would result
in gross proceeds to us of approximately $2.3 million.
We will pay the expenses
of registering the shares of common stock offered by this prospectus, but all selling and other expenses incurred by the Selling Stockholders
will be paid by the Selling Stockholders. The Selling Stockholders may sell our shares of common stock offered by this prospectus from
time to time on terms to be determined at the time of sale through ordinary brokerage transactions or through any other means described
in this prospectus under “Plan of Distribution.” The prices at which the Selling Stockholders may sell shares will be determined
by the prevailing market price for our common stock or in negotiated transactions.
Our common stock is listed on the Nasdaq Capital
Market under the symbol “AUUD.” On November 7, 2024, the closing price for our common stock, as reported on the Nasdaq Capital
Market, was $0.5499 per share. Our warrants offered in connection with our initial public offering (the “Series A Warrants”)
are quoted on the Nasdaq Capital Market under the symbol “AUUDW.” The last reported sale price of our Series A Warrants on
the Nasdaq Capital Market on November 7, 2024 was $0.025 per Series A Warrant.
We have received deficiency letters from The
Nasdaq Stock Market LLC (“Nasdaq”) that we are not in compliance with Nasdaq’s (i) minimum bid price requirement of
at least $1.00 per share (the “Bid Price Requirement”) and (ii) the requirement to have at least $2,500,000 in stockholders’
equity (the “Equity Requirement”). On October 16, 2024, we received a written notice from Nasdaq indicating that
we were not in compliance with the Bid Price Requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq
Capital Market (the “Bid Price Notice”). The Bid Price Notice does not result in the immediate delisting of the Company’s
common stock from the Nasdaq Capital Market. The Bid Price Notice indicated that the Company has 180 calendar days (or until April 14,
2025) in which to regain compliance. On April 16, 2024, the Company received a letter from Nasdaq granting an exception to the
Equity Requirement until May 20, 2024, to demonstrate compliance with Listing Rule 5550(b)(1). On May 24, 2024, the Company received
a letter from Nasdaq indicating that the Company has regained compliance with the Equity Requirement in Listing Rule 5550(b) (1). The
Company will be subject to a Mandatory Panel Monitor for a period of one year from the date of the letter in accordance with application
of Listing Rule 5815(d)(4)(B). See “Risk Factors — We may not be able to continue our current
listing of our common stock on the Nasdaq Capital Market. A delisting of our common stock from Nasdaq could limit the liquidity of our
stock, increase its volatility and hinder our ability to raise capital.”
You should read this
prospectus, together with additional information described under the headings “Where You Can Find More Information” carefully
before you invest in any of our securities.
INVESTING IN OUR SECURITIES
INVOLVES RISKS. SEE THE “RISK FACTORS” ON PAGE 10 OF THIS PROSPECTUS AND ANY SIMILAR
SECTION CONTAINED IN ANY DOCUMENT INCORPORATED BY REFERENCE HEREIN CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
Prospectus dated November 8, 2024
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
The registration statement
we filed with the Securities and Exchange Commission (the “SEC”) includes exhibits that provide more detail of the matters
discussed in this prospectus. You should read this prospectus, the related exhibits filed with the SEC, and the documents incorporated
by reference herein before making your investment decision. You should rely only on the information provided in this prospectus and the
documents incorporated by reference herein or any amendment thereto. You should not assume that the information contained in this prospectus
or any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any
information we have incorporated by reference herein is correct on any date subsequent to the date of the document incorporated by reference,
even though this prospectus or any related free writing prospectus is delivered, or securities are sold, on a later date. This prospectus
contains or incorporates by reference summaries of certain provisions contained in some of the documents described herein, but reference
is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of some of the documents referred to herein have been filed or have been incorporated by reference as exhibits to the registration
statement of which this prospectus forms a part, and you may obtain copies of those documents as described in this prospectus under the
heading “Where You Can Find More Information.”
You should rely only
on the information that we have included or incorporated by reference in this prospectus and any related free writing prospectus that
we may authorize to be provided to you. Neither we, nor the Selling Stockholders, have authorized any dealer, salesman or other person
to give any information or to make any representation other than those contained or incorporated by reference in this prospectus or any
related free writing prospectus that we may authorize to be provided to you. You must not rely upon any information or representation
not contained or incorporated by reference in this prospectus or any related free writing prospectus. This prospectus and any related
free writing prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered
securities to which they relate, nor does this prospectus or any related free writing prospectus constitute an offer to sell or the solicitation
of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
PROSPECTUS SUMMARY
The following summary
highlights information contained elsewhere in this prospectus. This summary is not complete and may not contain all the information you
should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing
in our common stock discussed under the heading “Risk Factors” included elsewhere
in this prospectus and in the sections titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2023, before making an investment decision. Except as otherwise
indicated herein or as the context otherwise requires, references in this prospectus and the documents incorporated by reference in this
prospectus to “Auddia,” “the Company,” “we,” “us” and “our” refer to Auddia
Inc. This prospectus includes forward-looking statements that involve risks and uncertainties. See “Information Regarding Forward-Looking Statements.”
This prospectus includes
trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this
prospectus are the property of their respective owners.
Overview
Auddia is a technology company headquartered in
Boulder, CO that is reinventing how consumers engage with audio through the development of a proprietary AI platform for audio and innovative
technologies for podcasts. Auddia is leveraging these technologies within its industry-first audio Superapp, faidr (previously known as
the Auddia App).
faidr gives consumers the opportunity to listen
to any AM/FM radio station with commercial breaks replaced with personalized audio content, including popular and new music, news, and
weather. The faidr app represents the first-time consumers can combine the local content uniquely provided by AM/FM radio with commercial-free
and personalized listening many consumers demand from digital-media consumption. In addition to commercial-free AM/FM, faidr includes
podcasts – also with ads removed or easily skipped by listeners – as well as exclusive content, branded faidrRadio, which
includes new artist discovery, curated music stations, and Music Casts. Music Casts are unique to faidr. Hosts and DJs can combine on-demand
talk segments with dynamic music streaming, which allows users to hear podcasts with full music track plays embedded in the episodes.
Auddia has also developed a differentiated podcasting
capability with ad-reduction features and also provides a unique suite of tools that helps podcasters create additional digital content
for their podcast episodes as well as plan their episodes, build their brand, and monetize their content with new content distribution
channels. This podcasting feature also gives users the ability to go deeper into the stories through supplemental, digital content, and
eventually comment and contribute their own content to episode feeds.
The combination of AM/FM streaming and podcasting,
with Auddia’s unique, technology-driven differentiators, addresses large and rapidly growing audiences.
We have developed our AI platform on top of
Google’s TensorFlow open-source library that is being “taught” to know the difference between all types of audio content
on the radio. For instance, the platform recognizes the difference between a commercial and a song and is learning the differences between
all other content to include weather reports, traffic, news, sports, DJ conversation, etc. Not only does the technology learn the differences
between the various types of audio segments, but it also identifies the beginning and end of each piece of content.
We are leveraging this technology platform
within our premium AM/FM radio listening experience through the faidr App. The faidr App is intended to be downloaded by consumers who
will pay a subscription fee in order to listen to any streaming AM/FM radio station and podcasts, all with commercial interruptions removed
from the listening experience, in addition to the faidrRadio exclusive content offerings. Advanced features will allow consumers to skip
any content heard on the station and request audio content on-demand. We believe the faidr App represents a significant differentiated
audio streaming product, or Superapp, that will be the first to come to market since the emergence of popular streaming music apps such
as Pandora, Spotify, Apple Music, Amazon Music, etc. We believe that the most significant point of differentiation is that
in addition to ad-free AM/FM streaming and ad-reduced podcasts, the faidr App is intended to deliver non-music content that includes
local sports, news, weather, traffic and the discovery of new music alongside exclusive programming. No other audio streaming app available
today, including category leaders like TuneIn, iHeart, and Audacy, can compete with faidr’s full product offerings.
We launched an MVP version of faidr through
several consumer trials in 2021 to measure consumer interest and engagement with the App. The full app launched on February 15, 2022,
and included all major U.S. radio stations in the US. In February 2023, we added faidrRadio, our exclusive content offerings, to the
app. Podcasts were added to the app for the iOS version before the end of Q1 2023 as planned and added to the Android app in May of 2023.
We also developed a testbed differentiated
podcasting capability called Vodacast, which leveraged technologies and proven product concepts to differentiate its podcasts offering
from other competitors in the radio-streaming product category.
With podcasting growing and predicted to grow
at a rapid rate, the Vodacast podcast platform was conceptualized to fill a void in the emerging audio media space. The platform was
built to become the preferred podcasting solution for podcasters by enabling them to deliver digital content feeds that match the audio
of their podcast episodes, and by enabling podcasters to make additional revenue from new digital advertising channels, subscription
channels, on-demand fees for exclusive content, and through direct donations from their listeners.
Throughout 2023 and 2024, Auddia has been
migrating their podcasting capabilities into the flagship faidr app bringing the advanced podcasting functionality from Vodacast into
faidr as part of the overall strategy to build a single audio Superapp. In July 2024, Auddia sunsetted the Vodacast app. Podcast functionality
continues to be developed in faidr and in August 2024, we released our Forward+ and Chapter Visualization into our differentiated AI
Podcast Player which delivers ad-reduction controls to a listener.
Today, podcasters do not have a preference as
to where their listeners access their episodes, as virtually all listening options (mobile apps and web players) deliver only their podcast
audio. By creating significant differentiation on which they can make net new and higher margin revenue, we believe that podcasters will
promote faidr to their listeners, thus creating a powerful, organic marketing dynamic.
One innovative and proprietary part of Auddia’s
podcast capabilities, originally presented on their Vodacast differentiated podcasting capability, is the availability of tools to create
and distribute an interactive digital feed, which supplements podcast episode audio with additional digital. These content feeds allow
podcasters to tell deeper stories to their listeners while giving podcasters access to digital revenue for the first time. Podcasters
will be able to build these interactive feeds using The Podcast Hub, a content management system that was originally developed and trialed
as part of Auddia’s Vodacast platform, which also serves as a tool to plan and manage podcast episodes. The digital feed activates
a new digital ad channel that turns every audio ad into a direct-response, relevant-to-the-story, digital ad, increasing the effectiveness
and value of their established audio ad model. The feed also presents a richer listening experience, as any element of a podcast episode
can be supplemented with images, videos, text and web links. This feed will appear fully synchronized in the faidr mobile App, and it
also can be hosted and accessed independently (e.g., through any browser), making the content feed universally distributable.
Over time, users will be able to comment, and
podcasters will be able to grant some users publishing rights to add content directly into the feed on their behalf. This will create
another first for podcasting, a dialog between creator and fan, synchronized to the episode content. The interactive feed for podcasts
has been developed and tested on Vodacast and is expected to be another differentiator added into faidr for podcast listeners later in
2025.
The podcast capabilities within faidr will also
introduce a unique and industry first multi-channel, highly flexible set of revenue channels that podcasters can activate in combination
to allow listeners to choose how they want to consume and pay for content. “Flex Revenue” allows podcasters to continue to
run their standard audio ad model and complement those ads with direct response enabled digital ads in each episode content feed, increasing
the value of advertising on any podcast. “Flex Revenue” will also activate subscriptions, on-demand fees for content (e.g.,
listen without audio ads for a micro payment fee) and direct donations from listeners. Using these channels in combination, podcasters
can maximize revenue generation and exercise higher margin monetization models, beyond basic audio advertising. “Flex Revenue”
and the initial inclusion of the new revenue channels that come with it will be added to podcasting in the faidr app, and the first elements
of this new monetization capability is expected to be commercially available in 2025, beginning with subscription plans to access
ad-reduction in podcasts.
The faidr mobile App is available today through
the iOS and Android App stores.
Software Products and Services
The faidr App
The faidr App is our flagship product and
is expected to generate the majority of our future revenue.
How the faidr App Works
A faidr subscriber will select a specific streaming
radio station to record and be able to listen to the recording of that station in a customized manner. The faidr App will record the station
in real time and its AI algorithm will identify the beginning and end of audio content segments including music and commercials. When
the recorded station is played back by the App subscriber, faidr will identify the audio content segments the user chooses not to consume
and automatically switch the audio playback of the recording to a different piece of audio content. For example, if a consumer chooses
not to listen to commercials during the playback of their recording of a station, the faidr App will automatically cover the commercial
segments with other content such as additional music.
We are developing strategies and content relationships
to access additional content sources to cover commercials and respond to skips across many content segments in addition to music and
commercials, such as sports, news, talk and weather. As the audio content ecosystem continues to expand, we believe faidr will represent
an attractive distribution platform for content providers. There is no guarantee the audio content ecosystem will continue to expand
along its current trajectory or that we will be able to secure access to content in an economically advantageous manner, both of which
would negatively impact the user experience within faidr. We have not yet secured the rights from content providers to place any
audio content into the platform in an on-demand use case.
Users of faidr can also access any podcast that’s
publicly available as well as exclusive programming, music stations and Music Casts, through faidrRadio.
Faidr’s Forward+ capability enables
podcast listeners to skip ads in one single step instead of utilizing the typical 30 second skip on most traditional players.
The faidr App is built on a proprietary artificial
intelligence platform developed and owned by us and subject to one issued patent and additional patent applications that are pending.
Copyright Law
To secure the rights to stream music and other
content through the faidr app, we may enter into license agreements with copyright owners of sound recordings and musical works or their
authorized agents. In June 2021, we filed a Notice of Use of Sound Recordings Under Statutory License in accordance with 37 CFR §
370.2, which authorized us to make noninteractive digital audio transmissions and reproductions of certain sound recordings pursuant
to the statutory licenses set forth in 17 U.S.C. §§ 112 and 114. We are also in the process of obtaining licenses with the
performing rights organizations in the United States, which negotiate blanket licenses with copyright users for the public performance
of compositions in their repertory, collect royalties under such licenses, and distribute those royalties to copyright owners.
The faidr App’s architecture presents
a built-in digital audio recorder (“DAR”) that will allow consumers to record third-party transmissions made available through
the faidr App. We believe such consumer-initiated recordings are authorized as non-infringing, fair use time shifting by consumers pursuant
to the Supreme Court’s decision in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). The Supreme
Court also ruled that the manufacturers of home video recording devices were not liable for reproductions made by consumers where the
devices had substantial non-infringing uses. faidr’s DAR is analogous to the Betamax television recorders found non-infringing
in the Universal City Studios decision. With the faidr’s DAR, users can select radio stations to record. Users can also control
their listening experience by deciding whether they will listen to commercials or other programming categories selected by the user.
We believe believes giving users the ability to avoid commercials is protected, non-infringing activity.
If a court were to hold that one or more functionalities
offered by the faidr App resulted in the violation of protected rights of third parties, we could be subject to liability for infringement,
the damages for which could be material.
Podcast Platform
Auddia’s Podcast Platform, which
includes the previously developed and commercially trialed Vodacast mobile app, is an interactive differentiated podcasting capability
we have built that allows podcasters to give their audiences an interactive audio experience. Podcast listeners are able to see video
and other digital content that correlates with the podcast audio and is presented to the listener as a digital feed. All content presented
in the digital feed can be synched to the podcast audio content. This allows podcast listeners to visually experience, interact with,
and eventually comment on audio content in podcasts.
Much of the technology we use in this platform
to create the feed of digital content synchronized to the audio content of the podcast is based on the core functionality and product
concepts the Company has used historically to provide synchronized digital feeds to over 580 radio stations.
The digital feed introduces a new revenue stream
to podcasters, such as synchronized digital advertising while providing end users a new digital content channel that compliments the core
audio of the podcast.
All of the content and functionality that
is made available within the Podcast Platform, through the Vodacast mobile app, is currently being added to the faidr app, diversifying
the podcast offering of faidr and bringing that app up to parity with the major, competing apps like iHeart Radio, TuneIn and Audacy.
In August 2024, new ad-reduction features were added to faidr which demonstrates our differentiation in the podcasting arena, for both
podcasters and consumers.
Business Model and Customer Acquisition Strategy
for faidr
We have an eight-year plus history of working
closely with the broadcast radio industry in the United States to help the industry adapt to both digital advertising and digital media
technologies.
We announced several broadcast radio partnerships
during 2021 in which we performed commercial trials within these markets. Based on the initial results from our commercial trials, we
believe consumers are drawn to an interruption-free radio experience. We executed a full launch in February 2022 that initially included
approximately 4,000 radio stations on the faidr App. We have continued to add stations to the faidr App which now presents more than
13,000 AM/FM streams.
Radio stations owned by broadcasters will be economically
incentivized to promote faidr to their listeners. We intend to leverage subscription revenue to compensate participating radio broadcasters
for promotional support and their increased music streaming fees. We believe that if participating broadcasters can generate increased
revenue from their content, they can decrease their on-air advertising load while increasing the price paid for each commercial, as the
commercial is more likely to be heard by consumers in a less cluttered advertising environment. In addition, we intend to offer tiered
subscriptions to the faidr App where lower priced subscriptions allow a lower level of functionality and control. We believe that our
history and existing relationships with broadcast radio will drive customer acquisition for the faidr App.
Our business model is based on creating a pool
of subscription revenue across all streaming stations and other content providers utilizing the faidr platform. This subscription pool,
excluding direct subscriber acquisition costs and increased music streaming fees, is expected to be shared with radio stations and other
content providers, such as podcasters whose episodes are available ad-free, based either on the time each listener spends listening or
the amount of plays on faidr. We believe this business model will result in broadcasters and podcasters promoting the listening of their
content within faidr, similar to how radio stations are currently using airtime to promote the listening of their stations on Alexa and
other smart speaker systems.
Our major podcast differentiators once implemented
in faidr, will be marketed to podcasters and podcasting companies with business-to-business strategies that focus on communicating the
value proposition and monetization opportunity. The potential to earn new, incremental revenue on the faidr platform, in addition to the
other key value propositions of the platform, is expected to organically drive podcasters to promote the platform directly to their listeners.
Direct-to-consumer marketing will be done independently by the Company and, in some cases, in partnership with podcasters who leverage
their audio content programs to promote to their established audiences. As is the case with other proven marketing strategies, we intend
to have our partners benefit from a participative revenue share through faidr podcasting.
Recent Developments
On April 23, 2024, we entered into the 2024
SPA with the Selling Stockholders for a convertible preferred stock and warrants financing. At the closing, we issued 2,314 shares of
Series B Convertible Preferred Stock at a purchase price of $1,000 per share of Series B Convertible Preferred Stock. The Series B Convertible
Preferred Stock is convertible into common stock at an initial conversion price of $1.851 per share of common stock. The Company also
issued the Common Warrants exercisable for 1,250,137 shares of common stock with a five year term.
The Common Warrants are immediately exercisable
for $1.851 per share of common stock, subject to certain adjustments, including with respect to stock dividends, splits, subsequent rights
offerings, pro rata distributions and a Fundamental Transaction (as defined in the Common Warrant) and until the fifth anniversary of
the original issuance date (the “Expiration Date”). The exercise of the Warrants are subject to beneficial ownership limitations.
The Company’s common stock price on
Nasdaq has declined significantly over the past several months. It is likely, therefore, that we will issue equity in future financing
transactions at an effective price per common share that is below the $1.851 (x) conversion price for the Series B Convertible Preferred
Stock and (y) exercise price of the Common Warrants. Certain future stock issuances at an effective price below $1.851 will result in
a downward conversion price adjustment for the Series B Convertible Preferred Stock. This would result in the Series B Convertible Preferred
Stock converting into more shares of common stock and would cause additional dilution. Certain future stock issuances at an effective
price below $1.851 will also result in a downward exercise price adjustment for the Common Warrants. For additional information regarding
potential adjustments for the Series B Convertible Preferred Stock, see “Description of Capital Stock—Preferred
Stock— Series B Convertible Preferred Stock” above.
Risks Associated with Our Business
Investing in our securities involves a high degree
of risk. You should carefully consider the risks described in “Risk Factors” beginning
on page 10 before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition,
results of operations and prospects would likely be materially, adversely affected. In that event, the trading price of our common stock
could decline, and you could lose part or all of your investment.
Going Concern Opinion
Our working capital deficiency, stockholders’
deficit, and recurring losses from operations raise substantial doubt about our ability to continue as a going concern. As a result, our
independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the year
ended December 31, 2023 with respect to this uncertainty. Our ability to continue as a going concern will require us to obtain additional
funding.
The Company secured approximately $10.4 million
in additional financing year-to-date through September 12, 2024, which enabled us to pay down $2.75 million in connection with the Secured
Bridge Notes and will only be sufficient to fund our current operating plans into the second quarter of 2025. The Company has based these
estimates, however, on assumptions that may prove to be wrong. We will need additional funding to complete the development of our full
product line and scale products with a demonstrated market fit. Management has plans to secure such additional funding. If we are unable
to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and
commercialization efforts.
As a result of the Company’s recurring losses
from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding
the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to
the Company’s ability to continue as a going concern.
Implications of Being
an Emerging Growth Company and a Smaller Reporting Company
We qualify as an “emerging growth company”
as defined in the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage
of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
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inclusion of only two years, as compared to three years, of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; |
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an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”); |
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an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation; |
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reduced disclosure about executive compensation arrangements; and |
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an exemption from the requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements. |
We may take advantage of these provisions until
we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the
fiscal year (a) following the fifth anniversary of the completion of our February 2021 IPO, (b) in which we have total annual gross revenue
of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our
common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt during the prior three-year period.
We have taken advantage
of the reduced reporting requirements in this prospectus and in the documents incorporated by reference into this prospectus. Accordingly,
the information contained herein may be different from the information you receive from other public companies that are not emerging growth
companies.
The JOBS Act permits
an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards
applicable to public companies until those standards would otherwise apply to private companies.
We are also a “smaller
reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue
was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either
(i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million
during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If
we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from
certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may
choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar
to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Our Corporate Information
We were originally formed
as Clip Interactive, LLC in January 2012, as a limited liability company under the laws of the State of Colorado. Immediately prior to
our initial public offering in February 2021, we converted into a Delaware corporation pursuant to a statutory conversion and were renamed
Auddia Inc.
Our principal executive offices are located at
1680 38th Street, Suite 130, Boulder, CO 80301. Our main telephone number is (303) 219-9771. Our internet website is www.auddia.com.
The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this
prospectus.
Trademarks
The Company also holds the trademark for “AUDDIA”
which is used as the corporate brand name, as well as “FAIDR” which is used as the name of the consumer-facing mobile application
that delivers the Company’s commercial free radio service. The Company also holds trademarks and is in the process of applying for
trademarks for key products and brands. The Company holds the trademark for our product named “PLAZE”, which is a potential
commercial-free music streaming product that is a potential future, strategic opportunity of our business.
We have omitted the ® and
™ designations, as applicable, for the trademarks used in this prospectus.
INFORMATION REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the
documents incorporated by reference in this prospectus include forward-looking statements, which involve risks and uncertainties. These
forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe,” “estimate,”
“project,” “anticipate,” “expect,” “seek,” “predict,” “continue,”
“possible,” “intend,” “may,” “might,” “will,” “could,” would”
or “should” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements
include all matters that are not historical facts. They appear in a number of places throughout this prospectus and the documents incorporated
by reference in this prospectus, and include statements regarding our intentions, beliefs or current expectations concerning, among other
things, our product candidates, research and development, commercialization objectives, prospects, strategies, the industry in which we
operate and potential collaborations. We derive many of our forward-looking statements from our operating budgets and forecasts, which
are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to
predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.
Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when
such performance or results will be achieved. In light of these risks and uncertainties, the forward-looking events and circumstances
discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking
statements.
Forward-looking statements
speak only as of the date of this prospectus. You should not put undue reliance on any forward-looking statements. We assume no obligation
to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking
information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should
be drawn that we will make additional updates with respect to those or other forward-looking statements.
You should read this
prospectus, the documents incorporated by reference in this prospectus, and the documents that we reference in this prospectus and have
filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual
future results, levels of activity, performance and events and circumstances may be materially different from what we expect. All forward-looking
statements are based upon information available to us on the date of this prospectus.
By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations,
financial condition, business and prospects may differ materially from those made in or suggested by the forward-looking statements contained
in this prospectus. In addition, even if our results of operations, financial condition, business and prospects are consistent with the
forward-looking statements contained in this prospectus, those results may not be indicative of results in subsequent periods.
Forward-looking statements
necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward-looking
statements due to a number of factors, including those set forth below under “Risk Factors”
and elsewhere in this prospectus. The factors set forth below under “Risk Factors”
and other cautionary statements made in this prospectus should be read and understood as being applicable to all related forward-looking
statements wherever they appear in this prospectus. The forward-looking statements contained in this prospectus represent our judgment
as of the date of this prospectus. We caution readers not to place undue reliance on such statements. Except as required by law, we undertake
no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events
occur in the future. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are
expressly qualified in their entirety by the cautionary statements contained above and throughout this prospectus.
You should read and
consider the information set forth in the section titled “Risk Factors,”
together with all of the other information included in or incorporated by reference in this prospectus and the documents that we have
filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual
future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary
statements.
THE OFFERING
| Securities Offered by the Selling Stockholders |
This prospectus covers the resale of a total of up to 5,905,898 shares of our common stock, consisting of, (a) up to 4,655,761 shares of common stock issuable upon conversion of our Series B Convertible Preferred Stock and (b) up to 1,250,137 shares of common stock issuable upon the exercise of the Common Warrants, each sold in the PIPE Offering pursuant to the 2024 SPA, by and between us and the Selling Stockholders. |
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| Common Stock Outstanding Prior to this Offering |
5,673,675 shares |
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| Common Stock to be Outstanding After this Offering |
Up to 11,579,573 shares |
| Use of Proceeds |
We will not receive any proceeds from the sale by the Selling Stockholders of the shares of common stock being offered by this prospectus. However, we may receive proceeds from the cash exercise of the Common Warrants, which, if exercised in cash at the current exercise price with respect to all Common Warrants, would result in gross proceeds to us of approximately $2.3 million. The proceeds from such Common Warrant exercises, if any, will be used for working capital and general corporate purposes. See “Use of Proceeds” on page 12 of this prospectus. |
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| Nasdaq Capital Market Symbols |
Common Stock “AUUD”. Series A Warrants “AUUDW”. |
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| Risk Factors |
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 10 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our securities. |
The number of shares outstanding after this offering is based on 5,673,675
shares of our common stock outstanding as of October 15, 2024, and excludes:
| · | 8,929
shares of our common stock reserved for issuance under outstanding stock options granted
under our 2013 Equity Incentive Plan, |
| · | 6,774
shares of our common stock reserved for issuance under outstanding restricted stock units
granted under our 2020 Equity Incentive Plan, |
| · | 39,632 shares of our common stock
reserved for issuance under outstanding stock options granted under our 2020 Equity Incentive
Plan, |
| · | 103,308 shares of our common
stock reserved for future grant under our 2020 Equity Incentive Plan, |
| · | 32,150 shares of our common stock
reserved for issuance under outstanding stock options and outstanding restricted stock units
granted as employment inducement awards to three of our former and current executives outside
of our 2013 and 2020 Equity Incentive Plans, |
| · | 1,026,674 shares of common stock
reserved for issuance upon the exercise of outstanding common stock warrants, |
| · | 139,956 shares of common stock
reserved for issuance upon the exercise of our publicly traded outstanding Series A Warrants, |
| · | 1,250,137 shares of common stock
reserved for issuance upon the exercise of warrants sold in a private placement, |
| · | 12,774 shares of common stock
reserved for issuance upon the exercise of an outstanding IPO underwriter representative
common stock warrant, and |
| · | Up to 2,290,000 shares or $1,823,951
of common stock that may be sold in the future by the Company to While Lion pursuant to the
Equity Line Purchase Agreement. |
RISK FACTORS
Investing in our securities involves a high
degree of risk. You should carefully consider the risks and uncertainties described below, together with the risks set forth under the
section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated
by reference herein. You should also refer to the other information contained in this prospectus, and the documents incorporated by reference
herein including our financial statements and the related notes, and the section titled “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023,
before deciding to invest in our securities. The risks and uncertainties described below are not the only ones we face. Other sections
of this prospectus may include additional factors which could adversely affect our business, results of operations and financial performance.
Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors
that affect us. If any of the following risks actually occurs, our business, financial condition, results of operations and prospects
could be materially and adversely affected, the trading price of our common stock could decline and you could lose all or part of your
investment.
Risks Relating to
this Offering
The Selling Stockholders
may sell their shares of common stock in the open market, which may cause our stock price to decline.
The Selling Stockholders
may sell the shares of common stock being registered in this offering in the public market. That means that up to 5,905,898 shares of
common stock, the number of shares being registered in this offering for sale by the Selling Stockholders if they exercise the Common
Warrants, may be sold in the public market. Such sales will likely cause our stock price to decline.
Sales of our common
stock by the Selling Stockholders could encourage short sales by third parties, which could contribute to the further decline of our stock
price.
The significant downward
pressure on the price of our common stock caused by the sale of material amounts of common stock could encourage short sales by third
parties. Such an event could place further downward pressure on the price of our common stock.
Risks related to our
financial position and need for additional capital
Our auditors have
expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain further financing.
Our past working capital deficiency, stockholders’
deficit and recurring losses from operations raised substantial doubt about our ability to continue as a going concern. As a result,
our independent registered public accounting firm has included an explanatory paragraph in its report on our financial statements for
the year ended December 31, 2023 with respect to this uncertainty. Our existing cash of $804,556 at December 31, 2023. The Company
secured approximately $10.4 million in additional financing year-to-date through October 15, 2024, which enabled us to pay down
$2.75 million in connection with the Secured Bridge Notes and will only be sufficient to fund our current operating plans into the second
quarter of 2025. The Company has based these estimates, however, on assumptions that may prove to be wrong. We will need additional funding
to complete the development of our full product line and scale products with a demonstrated market fit. Management has plans to secure
such additional funding. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or
eliminate our technology development and commercialization efforts.
We may not be able
to continue our current listing of our common stock on the Nasdaq Capital Market. A delisting of our common stock from Nasdaq could limit
the liquidity of our stock, increase its volatility and hinder our ability to raise capital.
We may not be able to
satisfy the requirements for the continued listing of our common stock on Nasdaq.
On November 21, 2023,
we received a written notice from Nasdaq indicating that we are not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires
companies listed on The Nasdaq Capital Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing
(the “Stockholders’ Equity Requirement”). In our quarterly report on Form 10-Q for the period ended September 30, 2023,
we reported stockholders’ equity of $2,415,012, and, as a result, did not satisfy Listing Rule 5550(b)(1). As a result, the Nasdaq
staff determined to delist our Common Stock from Nasdaq, unless we appealed the Staff’s determination to a Hearings Panel (the
“Panel”), We appealed the Nasdaq Staff’s determination, and our hearing with the Panel occurred on January 18, 2024.
On January 30, 2024, the Panel granted our
request for an exception to the Exchange’s listing rules until April 22, 2024, to demonstrate with all applicable continued listing
requirements for the Nasdaq Capital Market. On April 16, 2024, we received a letter from Nasdaq granting an exception to the Exchange’s
listing rules until May 20, 2024, to demonstrate compliance with the Stockholders’ Equity Requirement.
On May 24, 2024, we received a letter from
Nasdaq indicating that we had regained compliance with the Equity Requirement. We will be subject to a Mandatory Panel Monitor for a
period of one year from the date of the letter in accordance with application of Listing Rule 5815(d)(4)(B).
Nasdaq listing rules require listed securities
to maintain a minimum bid price of $1.00 per share. As previously reported in our Current Report on Form 8-K filed on October 23, 2024,
we received a written notice from Nasdaq indicating that we were was not in compliance with the $1.00 minimum bid price requirement set
forth in Nasdaq Listing Rule 5550(a)(2) for continued listing (the “Bid Price Requirement”). The Bid Price notice does not
result in the immediate delisting of the Company’s common stock from the Nasdaq Capital Market. The Bid Price notice indicated
that the Company has 180 calendar days (or until April 14, 2025) in which to regain compliance.
If our common stock is delisted by Nasdaq, our
common stock may be eligible for quotation on an over-the-counter quotation system or on the pink sheets. Upon any such delisting, our
common stock would become subject to the regulations of the SEC relating to the market for penny stocks. A penny stock is any equity security
not traded on a national securities exchange that has a market price of less than $5.00 per share. The regulations applicable to penny
stocks may severely affect the market liquidity for our common stock and could limit the ability of shareholders to sell securities in
the secondary market. In such a case, an investor may find it more difficult to dispose of or obtain accurate quotations as to the market
value of our common stock, and there can be no assurance that our common stock will be eligible for trading or quotation on any alternative
exchanges or markets.
Delisting from Nasdaq could adversely affect our
ability to raise additional financing through public or private sales of equity securities, would significantly affect the ability of
investors to trade our securities and would negatively affect the value and liquidity of our common stock. Delisting could also have other
negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business
development opportunities.
If our common stock is
delisted by Nasdaq, our common stock may be eligible for quotation on an over-the-counter quotation system or on the pink sheets. Upon
any such delisting, our common stock would become subject to the regulations of the SEC relating to the market for penny stocks. A penny
stock is any equity security not traded on a national securities exchange that has a market price of less than $5.00 per share. The regulations
applicable to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of shareholders to
sell securities in the secondary market. In such a case, an investor may find it more difficult to dispose of or obtain accurate quotations
as to the market value of our common stock, and there can be no assurance that our common stock will be eligible for trading or quotation
on any alternative exchanges or markets.
Delisting from Nasdaq
could adversely affect our ability to raise additional financing through public or private sales of equity securities, would significantly
affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock. Delisting
could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest
and fewer business development opportunities.
MARKET AND INDUSTRY
DATA
Unless otherwise indicated,
information contained (or incorporated by reference) in this prospectus concerning our industry and the markets in which we operate is
based on information from independent industry and research organizations, other third-party sources and management estimates. Management
estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as
data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and
markets which we believe to be reasonable. Although we believe the data from these third-party sources is reliable, we have not independently
verified any third-party information. In addition, projections, assumptions and estimates of the future performance of the industry in
which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those
set forth under the section titled “Risk Factors” included in this prospectus and the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023. These and other factors could
cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
USE OF PROCEEDS
We are not selling any
securities under this prospectus and will not receive any proceeds from the sale of the common stock offered by this prospectus by the
Selling Stockholders. However, we may receive proceeds from the cash exercise of the Common Warrants, which, if exercised in cash at the
current exercise price with respect to all Common Warrants, would result in gross proceeds to us of approximately $2.31 million. The proceeds
from such Common Warrant exercises, if any, will be used for working capital and general corporate purposes. We cannot predict when or
whether the Common Warrants will be exercised, and it is possible that some or all of the Common Warrants may expire unexercised. For
information about the Selling Stockholders, see “Selling Stockholders.”
The Selling Stockholders
will pay any underwriting discounts and commissions and expenses incurred by the Selling Stockholders for brokerage or legal services
or any other expenses incurred by the Selling Stockholders in disposing of the shares of common stock offered hereby. We will bear all
other costs, fees and expenses incurred in effecting the registration of the shares of common stock covered by this prospectus, including
all registration and filing fees and fees and expenses of our counsel and accountants.
DIVIDEND POLICY
We have not declared
or paid any cash dividends on our capital stock since our inception. We intend to retain future earnings, if any, to finance the operation
and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. We intend to capitalize the required dividends on our Series C Convertible Preferred Stock or pay such dividends
in common shares.
MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS
Our common stock has been traded on the Nasdaq
Stock Market under the symbol “AUUD” since our IPO on February 17, 2021. Our Series A Warrants have been traded on the Nasdaq
Stock Market under the symbol “AUUDW” since our IPO on February 17, 2021. As of October 15, 2024, there were approximately
141 holders of record of our common stock and 1 holder of record of our Series A warrants. These numbers are based on the actual number
of holders registered at such date and does not include holders whose shares are held in “street name” by brokers and other
nominees.
Dividends
We have never paid any
cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation
of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination
to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results,
capital requirements, general business conditions and other factors that our board of directors may deem relevant.
DESCRIPTION OF CAPITAL
STOCK
The following description
is intended as a summary of our certificate of incorporation (which we refer to as our “charter”) and our bylaws, each of
which is filed as an exhibit to the registration statement of which this prospectus forms a part, and to the applicable provisions of
the Delaware General Corporation Law. Because the following is only a summary, it does not contain all of the information that may be
important to you. For a complete description, you should refer to our charter and bylaws.
We have two classes of
securities registered under Section 12 of the Exchange Act. Our shares of common stock are listed on The Nasdaq Stock Market under the
trading symbol “AUUD.” Our Series A Warrants are listed on the Nasdaq Stock Market under the trading symbol “AUUDW.”
Authorized Capital
Stock
Our authorized capital
stock consists of 100,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value
$0.001 per share.
Common Stock
The holders of our common
stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders. The holders of our common stock
do not have any cumulative voting rights. Holders of our common stock are entitled to receive ratably any dividends declared by our board
of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred
stock. Our common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.
In the event of our liquidation,
dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payment of all
debts and other liabilities and any liquidation preference of any outstanding preferred stock. Each outstanding share of common stock
is duly and validly issued, fully paid and non-assessable.
Preferred stock
Our board will have the
authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to
fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting,
or the designation of, such series, any or all of which may be greater than the rights of common stock. The issuance of our preferred
stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments
and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing
a change in control of our company or other corporate action.
Series A Preferred
Stock
On November 10, 2023,
we entered into a securities purchase agreement with Jeffrey Thramann, our Executive Chairman, pursuant to which we issued and sold one
(1) share of our newly designated Series A Preferred Stock for an aggregate purchase price of $1,000.
The share of Series A
Preferred Stock will have 30,000,000 votes and will vote together with the outstanding shares of our common stock as a single class exclusively
with respect to any proposal to amend our Certificate of Incorporation to effect a reverse stock split of our common stock. The share
of Series A Preferred Stock will be voted, without action by the holder, on any such reverse stock split proposal in the same proportion
as shares of common stock are voted on such proposal (excluding any shares of common stock that are not voted).
On December 29, 2023,
we redeemed the one outstanding share of Series A Preferred Stock in accordance with its terms. The redemption price was $1,000. No Series
A Preferred Stock remains outstanding.
The Series A Preferred
Stock otherwise has no voting rights, except as may otherwise be required by the General Corporation Law of the State of Delaware. The
share of Series A Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of our stock or other
securities. The share of Series A Preferred Stock has no rights with respect to any distribution of our assets, including upon a liquidation,
bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up, whether voluntarily or involuntarily. The holder of
the Share of Series A Preferred Stock will not be entitled to receive dividends of any kind. The share of Series A Preferred Stock shall
be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by our board in its sole discretion or (ii) automatically
upon the effectiveness of the amendment to the Certificate of Incorporation implementing a reverse stock split. Upon such redemption,
the holder of the Series A Preferred Stock will receive consideration of $1,000.00 in cash.
Series B Convertible
Preferred Stock
On November 10, 2023,
we entered into a securities purchase agreement with accredited investors, pursuant to which we issued and sold 2,314 shares of our newly
designated Series B Convertible Preferred Stock for an aggregate purchase price of $2,314,000.
Holders of the Series B Convertible Preferred
Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly. We have the option to pay dividends on the Series
B Convertible Preferred Stock in additional shares of common stock. If we elect to pay in the form of common stock, the number of dividend
shares to be issued shall be calculated by using a “Dividend Conversion Price” equal to the lower of (i) the then applicable
Conversion Price (as defined in the Certificate of Designations) as in effect on the applicable dividend date, or (ii) 90% of the lowest
volume-weighted average price (“VWAP”) of the common stock during the five (5) consecutive trading day period ending and including
the trading day immediately preceding the applicable dividend date. We also have the option to cumulate or “capitalize” the
dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series B Convertible Preferred
Stock.
The stated value of each
share of Series B Convertible Preferred Stock (including all the unpaid dividends and other amounts payable on the Series B Convertible
Preferred Stock) will be convertible into common stock at an initial fixed Conversion Price of $1.851 per share of common stock. The Series
B Convertible Preferred Stock may be converted into shares of common stock at any time at the option of the holder. The Series B Convertible
Preferred Stock may also be converted into shares of common stock at our option if the closing price of the common stock exceeds 300%
of the Conversion Price for 20 consecutive trading days.
The Conversion Price
of the Series B Convertible Preferred Stock is subject to certain anti-dilution adjustments, including in the event of any stock splits
or combinations, certain dividends and distributions, reclassification, exchange or substitution of our common stock or in the event that
we grant, issue or sell (or enters into any agreement to grant, issue or sell), or are deemed to have granted, issued or sold, any shares
of common stock for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in
effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (the foregoing a “Dilutive Issuance”)
Immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance
Price.
The Series B Convertible
Preferred Stock has no voting rights, except as may otherwise be required by the General Corporation Law of the State of Delaware. The
stated value of each share of Series B Convertible Preferred Stock (including all the unpaid dividends and other amounts payable on the
Series B Convertible Preferred Stock) will be convertible into common stock at an initial fixed Conversion Price of $1.851 per share of
common stock. The Series B Convertible Preferred Stock may be converted into shares of common stock at any time at the option of the holder.
The Conversion Price
of the Series B Convertible Preferred Stock is subject to certain anti-dilution adjustments, including in the event of any stock splits
or combinations, certain dividends and distributions, reclassification, exchange or substitution of our common stock or in the event that
we grant, issue or sell (or enters into any agreement to grant, issue or sell), or are deemed to have granted, issued or sold, any shares
of common stock for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in
effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (the foregoing a “Dilutive Issuance”)
Immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance
Price.
The Certificate of Designations
contains customary events of default, or “Triggering Events”, including, among others, (i) certain events of bankruptcy, insolvency
or reorganization; (ii) failure to comply with the listing rules of Nasdaq; (iii) certain breaches of the transaction agreements related
to this financing; and (iv) any of the shares of the Series B Convertible Preferred Stock remaining outstanding on or after April 23,
2026.
Upon the occurrence of
a Triggering Event, (i) the dividend rate on the Series B Convertible Preferred Stock will increase to 18%, and (ii) the Conversion Price
then in effect will be adjusted to an “Alternate Conversion Price” equal to the lowest of (i) the applicable Conversion Price
as then in effect, and (ii) the greater of (x) the “Floor Price” of $0.3702 and (y) 80% of the lowest VWAP of the common stock
during the five (5) consecutive trading day period immediately preceding the delivery or deemed delivery of the applicable conversion
notice.
At any time, we shall
have the right to redeem all, but not less than all, of the Series B Convertible Preferred Shares then outstanding in cash at a 25% redemption
premium to the greater of (i) the face value of our common stock underlying the Series B Convertible Preferred Shares and (ii) the equity
value of our common stock underlying the Series B Convertible Preferred Shares. The equity value of our common stock underlying the Series
B Convertible Preferred Shares is calculated using the greatest closing sale price of our common stock on any trading day immediately
preceding the date we notify the holders of our election to redeem and the date we make the entire payment required.
Upon our liquidation,
dissolution or winding up, holders of Series B Convertible Preferred Stock shall be entitled to receive in cash out of our assets, before
any amount shall be paid to the holders of any of shares of common stock, an amount per shares of Series B Convertible Preferred Stock
equal to the sum of (i) the Black Scholes Value (as defined in the Warrants) with respect to the outstanding portion of all Warrants held
by such holder (without regard to any limitations on the exercise thereof) as of the date of such event and (ii) the greater of (A) 125%
of the applicable liquidation value and (B) the amount per share such holder would receive if such holder converted such share of Series
B Convertible Preferred Stock into common stock immediately prior to the date of such payment.
We have no other shares
of preferred stock are currently outstanding.
Anti-Takeover Effects
of Delaware Law and Provisions of Our Charter and Our Bylaws
Certain provisions of
the DGCL and of our charter and our bylaws could have the effect of delaying, deferring or preventing another party from acquiring control
of us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board
of directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.
Delaware Anti-Takeover
Statute
We are subject to the
provisions of Section 203 of the DGCL. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business
combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes
an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203, a business combination
between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:
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before the stockholder became interested, our Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
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upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances, but not the outstanding voting stock owned by the interested stockholder; or |
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at or after the time the stockholder became interested, the business combination was approved by our Board and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder. |
Section 203 defines a
business combination to include:
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any merger or consolidation involving the corporation and the interested stockholder; |
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any sale, transfer, lease, pledge, exchange, mortgage or other disposition involving the interested stockholder of 10% or more of the assets of the corporation; |
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subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; or |
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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
In general, Section 203
defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation
and any entity or person affiliated with or controlling or controlled by the entity or person.
Board Composition
and Filling Vacancies
Our charter provides
that stockholders may remove directors only for cause and only by the affirmative vote of the holders of at least two-thirds of our outstanding
common stock. Our charter and bylaws authorize only our board of directors to fill vacant directorships, including newly created seats.
In addition, the number of directors constituting our board of directors may only be set by a resolution adopted by a majority vote of
our entire board of directors. These provisions would prevent a stockholder from increasing the size of our board of directors and then
gaining control of our board of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change
the composition of our board of directors but promotes continuity of management.
No Written Consent
of Stockholders
Our charter and bylaws
provide that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that
stockholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take
stockholder actions and would prevent the amendment of our bylaws or removal of directors by our stockholders without holding a meeting
of stockholders.
Meetings of Stockholders
Our charter and bylaws
provide that only a majority of the members of our Board then in office, our Executive Chairman or our Chief Executive Officer may call
special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon
at a special meeting of stockholders.
Advance Notice Requirements
Our bylaws provide advance
notice procedures for stockholders seeking to bring matters before our annual meeting of stockholders or to nominate candidates for election
as directors at our annual meeting of stockholders. Our bylaws also specify certain requirements regarding the form and content of a stockholder’s
notice. These provisions might preclude our stockholders from bringing matters before our annual meeting of stockholders or from making
nominations for directors at our annual meeting of stockholders if the proper procedures are not followed. We expect that these provisions
might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate
of directors or otherwise attempting to obtain control of our company.
Amendment to Our Charter
and Bylaws
The DGCL, provides, generally,
that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate
of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws, as the case may be, requires a greater
percentage. Our bylaws may be amended or repealed by a majority vote of our board of directors or the affirmative vote of the holders
of at least two-thirds of the votes that all our stockholders would be entitled to cast in an annual election of directors. In addition,
the affirmative vote of the holders of at least two-thirds of the votes that all our stockholders would be entitled to cast in an election
of directors is required to amend or repeal or to adopt certain provisions of our charter.
Undesignated Preferred
Stock
Our charter provides
for 10,000,000 authorized shares of preferred stock. The existence of authorized but unissued shares of preferred stock may enable our
board to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if
in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best
interests of our stockholders, our board could cause shares of convertible preferred stock to be issued without stockholder approval in
one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent
stockholder or stockholder group. In this regard, our charter grants our board broad power to establish the rights and preferences of
authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and
assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and powers,
including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.
Choice of Forum
Our charter provides
that the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings: any derivative
action or proceeding brought on behalf of the Company, any action asserting a claim of breach of a fiduciary duty owed by any director,
officer or other employee of the Company to the Company or the Company’s stockholders, any action asserting a claim against the
Company arising pursuant to any provision of the DGCL or the Company’s certificate of incorporation or bylaws, or any action asserting
a claim against the Company governed by the internal affairs doctrine. Our charter also provides that unless the Company consents in writing
to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for
the resolution of any complaint asserting a cause of action arising under the Securities Act. Despite the fact that the certificate of
incorporation provides for this exclusive forum provision to be applicable to the fullest extent permitted by applicable law, Section
27 of the Exchange Act, creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the
Exchange Act or the rules and regulations thereunder and Section 22 of the Securities Act, creates concurrent jurisdiction for federal
and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
As a result, this provision of the Company’s certificate of incorporation would not apply to claims brought to enforce a duty or
liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. However, there is
uncertainty as to whether a Delaware court would enforce the exclusive federal forum provisions for Securities Act claims and that investors
cannot waive compliance with the federal securities laws and rules and regulations thereunder.
Unless the Company consents
in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive
forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Series A Warrants
Each Series A Warrant
represents the right to purchase one share of common stock at an exercise price of $113.4375. The Series A Warrants are exercisable beginning
February 17, 2021 will terminate on the 5th anniversary date the Series A Warrants are first exercisable. The exercise price and number
of shares for which each Series A Warrant may be exercised is subject to adjustment in the event of stock dividends, stock splits, reorganizations
or similar events affecting our common stock.
Holders of the Series
A Warrants may exercise their Series A Warrants to purchase shares of our common stock on or before the termination date by delivering
an exercise notice, appropriately completed and duly signed. Payment of the exercise price for the number of shares for which the Series
A Warrants is being exercised must be made within two trading days following such exercise. In the event that the registration statement
relating to the Series A Warrants shares (the “Warrant Shares”) is not effective, a holder of Series A Warrants may only exercise
its Series A Warrants for a net number of Warrant Shares pursuant to the cashless exercise procedures specified in the Series A Warrants.
Series A Warrants may be exercised in whole or in part, and any portion of a Series A Warrant not exercised prior to the termination date
shall be and become void and of no value. The absence of an effective registration statement or applicable exemption from registration
does not alleviate our obligation to deliver common stock issuable upon exercise of a Series A Warrant.
Upon the holder’s
exercise of a Series A Warrant, we will issue the shares of common stock issuable upon exercise of the Series A Warrant within three trading
days of our receipt of notice of exercise, subject to timely payment of the aggregate exercise price therefor.
The shares of common
stock issuable on exercise of the Series A Warrants will be, when issued in accordance with the Series A Warrants, duly and validly authorized,
issued and fully paid and non-assessable. We will authorize and reserve at least that number of shares of common stock equal to the number
of shares of common stock issuable upon exercise of all outstanding warrants.
If, at any time a Series
A Warrant is outstanding, we consummate any fundamental transaction, as described in the Series A Warrants and generally including any
consolidation or merger into another corporation, the consummation of a transaction whereby another entity acquires more than 50% of our
outstanding common stock, or the sale of all or substantially all of our assets, or other transaction in which our common stock is converted
into or exchanged for other securities or other consideration, the holder of any Series A Warrants will thereafter receive upon exercise
of the Series A Warrants, the securities or other consideration to which a holder of the number of shares of common stock then deliverable
upon the exercise or conversion of such Series A Warrants would have been entitled upon such consolidation or merger or other transaction.
The Series A Warrants
are not exercisable by their holder to the extent (but only to the extent) that such holder or any of its affiliates would beneficially
own in excess of 4.99% of our common stock.
Amendments and waivers
of the terms of the Series A Warrants require the written consent of the holder of such Series A Warrants and us. The Series A Warrants
will be issued in book-entry form under a warrant agent agreement between V-Stock Transfer Company, Inc. as warrant agent, and us, and
shall initially be represented by one or more book-entry certificates deposited with The Depository Trust Company, or DTC, and registered
in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.
You should review a copy
of the warrant agent agreement and the form of the Series A Warrants, each of which are included as exhibits to the registration statement
of which this prospectus is a part.
Transfer Agent, Registrar, Warrant Agent
The transfer agent and registrar for our common
stock and the warrant agent for our Series A Warrants is VStock Transfer LLC, 18 Lafayette Place, Woodmere, NY 11598.
As of October 15, 2024, there were 5,673,675
shares of our common stock outstanding, and approximately 141 stockholders of record. No shares of our preferred stock are designated,
issued or outstanding.
Other Warrants
At October 15, 2024, we had 1,039,448
outstanding common stock warrants. The 463,337 prefunded warrants have an exercise price of $0.001 per share. The non-prefunded warrants
have a weighted-average exercise price of $16.36. 1,129,404 of the outstanding warrants are currently exercisable and have a weighted
average remaining contractual life of approximately 4.6 years as of October 15, 2024.
These warrants have a net exercise provision under
which its holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based
on the fair market value of the underlying shares at the time of exercise of the warrant after deduction of a number of shares equal in
value to the aggregate exercise price. The warrants contain provisions for the adjustment of the exercise price and the number of shares
issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reorganizations, reclassifications and
consolidations.
Outstanding Stock Options and Restricted Stock
Units
At December 31, 2023, we had 9,877 outstanding
common stock options, with a weighted-average exercise price of $3.65, which were granted under the Clip Interactive, LLC 2013 Equity
Incentive Plan. We ceased granting awards under the 2013 Plan upon the implementation of the 2020 Plan described below.
At December 31, 2023, we had zero shares of our
common stock reserved for issuance under outstanding stock options and outstanding Restricted Stock Units granted as employment inducement
awards to four of our former and current executives outside of our 2013 and 2020 Equity Incentive Plans.
2020 Equity Incentive Plan
The Company’s 2020 Equity Incentive Plan,
which became effective upon the completion of the IPO in February 2021, serves as the successor equity incentive plan to the 2013 Plan.
The 2020 Plan currently has an aggregate of 150,036 shares of common stock authorized for issuance, after giving effect to the “evergreen”
increase of 39,893 shares as of January 1, 2024.
The 2020 Equity Incentive Plan contains an “evergreen”
provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan shall be increased
on the first day of each year beginning January 1, 2022 and ending January 1, 2030 equal to the lesser of (a) five percent (5%) of the
shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (b) such smaller number
of shares of stock as determined by our board of directors.
At December 31, 2023 under our 2020 Equity Incentive
Plan, there were (i) 43,368 outstanding common stock options with a weighted average exercise price of $51.48 (ii) 10,990 outstanding
restricted stock units, and (iii) 107,364 shares remaining available for future grant.
SELLING STOCKHOLDERS
The Selling Stockholders acquired the Series B
Convertible Preferred Stock and Common Warrants from us in an private placement pursuant to an exemption from registration under Section
4(a)(2) of the Securities Act, and/or Rule 506 under Regulation D promulgated thereunder. The common stock being offered by the Selling
Stockholders are those issuable to the Selling Stockholders, upon conversion of the Series B Convertible Preferred Stock and exercise
of the Warrants. For additional information regarding the issuance of the Series B Convertible Preferred Stock and Common Warrants, see
“Prospectus Summary—Recent Developments—Private Placement of Preferred Stock and Common Warrants” above.
We are registering the
shares of common stock in order to permit the Selling Stockholders to offer the shares for resale from time to time. Except for the ownership
of the shares of the Series B Convertible Preferred Stock and the Common Warrants, the Selling Stockholders have not had any material
relationship with us within the past three years.
The table below lists the Selling Stockholders
and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder) of the shares of common stock by each of the Selling Stockholders. The second column
lists the number of shares of common stock beneficially owned by each of the Selling Stockholders, based on its ownership of the Series
B Convertible Preferred Stock and Common Warrants, as of October 15, 2024, assuming conversion of the Series B Convertible Preferred
Stock and exercise of the Common Warrants held by the Selling Stockholders on that date, without regard to any limitations on conversion
and exercise set forth in the Certificate of Designation for the Series B Convertible Preferred Stock or Common Warrants.
The third column lists
the shares of common stock being offered by this prospectus by the Selling Stockholders (without regard to any limitations on conversion
of the Series B Convertible Preferred Stock set forth in the Certificate of Designation related thereto or exercise of the Common Warrants
set forth therein).
In accordance with the
terms of a registration rights agreement with the Selling Stockholders, this prospectus generally covers the resale of the sum of (i)
250% of the maximum number of shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock (assuming for
purposes hereof that (x) the preferred stock are convertible at the initial conversion price (as defined in the Certificate of Designations),
(y) dividends on the preferred stock shall accrue through the second anniversary of the issuance thereof and will be converted in shares
of common stock at a dividend conversion price equal to the Dividend Conversion Price (as defined in the Certificate of Designations)
assuming an Dividend Date (as defined in the Certificate of Designations) as of the date hereof and (z) any such conversion shall not
take into account any limitations on the conversion of the Series B Convertible Preferred Stock set forth in the Certificate of Designation
related thereto) and (ii) the maximum number of shares of common stock issuable upon exercise of the Common Warrants, determined as if
the outstanding Common Warrants were exercised in full as of the trading day immediately preceding the date this registration statement
was initially filed with the SEC, without regard to any limitations on the exercise of the Common Warrants. Because the conversion price
of the Series B Convertible Preferred Stock may be adjusted, the number of shares that will actually be issued may be more or less than
the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the Selling
Stockholders pursuant to this prospectus.
Under the terms of the Series B Convertible Preferred
Stock and the Common Warrants held by Selling Stockholders, a Selling Stockholder may not convert any Series B Convertible Preferred Stock
or exercise any Common Warrants to the extent such exercise would cause such Selling Stockholder, together with its affiliates and attribution
parties, to beneficially own a number of shares of common stock which would exceed 4.99% (the “Maximum Percentage”), of our
then outstanding common stock following such exercise, excluding for purposes of such determination shares of common stock issuable upon
conversion of the Series B Convertible Preferred Stock which have not been converted or exercise of the Common Warrants which have not
been exercised. The number of shares in the second column reflects these limitations, however, the fourth column does not reflect this
limitation. The Selling Stockholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
| Name of Selling Stockholder |
|
Number of Shares of
Common Stock
Owned Prior to
Offering(1) |
|
|
Maximum Number of Shares of Common Stock
to be Offered Pursuant to
this Prospectus(2) |
|
|
Number of Shares of
Common Stock
Owned After Offering(11) |
|
| |
|
Number |
|
|
Percent |
|
|
|
|
|
Number |
|
|
Percent |
|
| Cavalry Fund I, LP(3) |
|
|
283,116 |
(4) |
|
|
4.99% |
|
|
|
2,552,246 |
|
|
|
0 |
|
|
|
* |
|
| WVP Emerging Manager Onshore Fund LLC – Structured Small Cap Lending Series(5) |
|
|
283,116 |
(6) |
|
|
4.99% |
|
|
|
1,056,630 |
|
|
|
0 |
|
|
|
* |
|
| Cadence Hill Opportunity Fund, LP(7) |
|
|
283,116 |
(8) |
|
|
4.99% |
|
|
|
1,020,899 |
|
|
|
0 |
|
|
|
* |
|
| Bigger Capital Fund, LP(9) |
|
|
283,116 |
(10) |
|
|
4.99% |
|
|
|
1,276,123 |
|
|
|
0 |
|
|
|
* |
|
| * |
Represents beneficial ownership of less than 1% of the outstanding shares of our common stock. |
| |
|
| (1) |
Applicable
percentage ownership is based on 5,673,675 shares of our common stock outstanding as of October 15, 2024. |
| |
|
| (2) |
For the purposes of the calculations of common stock to be sold pursuant to the prospectus we are assuming that (i) the Common Warrants are exercised in full and the Series B Convertible Preferred Stock is converted in full at a conversion price of $1.851 per share with dividends accruing through the second anniversary of the issuance thereof, in each case without regard to any limitations set forth in the Common Warrant or the Certificate of Designation, as applicable, (ii) a triggering event under the Certificate of Designation has not occurred, and (iii) any dividends will be converted into shares of common stock at a dividend conversion price equal to the dividend conversion price of $1.512. |
| |
|
| (3) |
Cavalry Fund I GP LLC, the General Partner of Cavalry Fund I, LP, has discretionary authority to vote and dispose of the shares held by Cavalry Fund I, LP, and may be deemed to be the beneficial owner of these shares. Thomas Walsh, in his capacity as CEO of Cavalry Fund I GP LLC, may also be deemed to have investment discretion and voting power over the shares held by Cavalry Fund I, LP. Cavalry Fund I GP LLC and Mr. Walsh each disclaim any beneficial ownership of these shares. The business address of Cavalry Fund I LP is 1111 Brickell Avenue, Suite 2920, Miami, FL 33131. |
| (4) |
This column
lists the number of shares of our common stock beneficially owned by this Selling Stockholder as of October 15, 2024 after giving
effect to the Maximum Percentage (as defined above). Without regard to the Maximum Percentage, as of October 15, 2024, this Selling
Stockholder would beneficially own an aggregate of 2,552,246 shares of our common stock, consisting of (i) 2,011,997 shares issuable
upon conversion of 1,000 shares of Series B Convertible Preferred Stock, with an initial stated value of $1,000 per share,
all of which shares are being registered for resale under this prospectus, and (ii) 540,249 shares issuable upon exercise of the
Selling Stockholder’s Common Warrants, all of which shares are being registered for resale under this prospectus. |
| |
|
| (5) |
WVP Management, LLC, the Managing Member of WVP Emerging Manager Onshore Fund LLC - Structured Small Cap Lending Series, has discretionary authority to vote and dispose of the shares held by this Selling Stockholder and may be deemed to be the beneficial owner of these shares. Cavalry Fund I Management LLC and Worth Venture Partners, LLC, in their capacity as advisors to this Selling Stockholder, may also be deemed to have investment discretion and voting power of the shares held by this Selling Stockholder. Thomas Walsh, in his capacity as General Partner, CEO, and CIO of Cavalry Fund I Management LLC, may also be deemed to have investment discretion and voting power over the shares held by this Selling Stockholder. Abby Flamholz, in her capacity as Managing Member of WVP Management, LLC and in her capacity as Managing Member of Worth Venture Partners, LLC, may also be deemed to have investment discretion and voting power of the shares held by this Selling Stockholder. WVP Management, LLC, Cavalry Fund I Management LLC, Worth Venture Partners, LLC, Mr. Walsh and Ms. Flamholz each disclaim any beneficial ownership of these shares. The business address of WVP Emerging Manager Onshore Fund, LLC - Structured Small Cap Lending Series is 1111 Brickell Avenue, Suite 2920, Miami, FL 33131. |
| |
|
| (6) |
This column lists the number
of shares of our common stock beneficially owned by this Selling Stockholder as of October 15, 2024 after giving effect to the
Maximum Percentage (as defined above). Without regard to the Maximum Percentage, as of October 15, 2024, this Selling Stockholder
would beneficially own an aggregate of 1,056,630 shares of our common stock, consisting of (i) 832,967 shares issuable upon conversion
of 414 shares of Series B Convertible Preferred Stock, with an initial stated value of $1,000 per share, all of which shares
are being registered for resale under this prospectus, and (ii) 223,663 shares issuable upon exercise of the Selling Stockholder’s
Common Warrants, all of which shares are being registered for resale under this prospectus. |
| |
|
| (7) |
Matthew Lamberti is the Portfolio Manager of Cadence Hill Opportunity Fund, LP, and may be deemed to have voting and dispositive power with respect to the shares held by this Selling Stockholder. Mr. Lamberti disclaims beneficial ownership of the shares held by the Selling Stockholder. The business address of Cadence Hill Opportunity Fund, LP is 7 World Trade Center New York, NY 10007. |
| |
|
| (8) |
This column lists the number
of shares of our common stock beneficially owned by this Selling Stockholder as of October 15, 2024 after giving effect to the
Maximum Percentage (as defined in above). Without regard to the Maximum Percentage, as of October 15, 2024, this Selling Stockholder
would beneficially own an aggregate of 1,020,899 shares of our common stock, consisting of (i) 804,799 shares issuable upon conversion
of 400 shares of Series B Convertible Preferred Stock and (ii) 216,100 shares issuable upon exercise of the Selling Stockholder’s
Common Warrants. |
| |
|
| (9) |
Michael Bigger is the managing member of Bigger Capital Fund, LP and has voting control and investment discretion over securities beneficially owned directly by Bigger Capital Fund, LP. The business address of Bigger Capital Fund, LP is 11700 W Charleston Blvd. 170-659, Las Vegas, NV 89135. |
| (10) |
This column
lists the number of shares of our common stock beneficially owned by this Selling Stockholder as of October 15, 2024 after giving
effect to the Maximum Percentage (as defined above). Without regard to the Maximum Percentage, as of October 15, 2024, this Selling
Stockholder would beneficially own an aggregate of 1,276,123 shares of our common stock, consisting of (i) 1,005,998 shares issuable
upon conversion of 500 shares of Series B Convertible Preferred Stock and (ii) 270,125 shares issuable upon exercise of the Selling
Stockholder’s Common Warrants. |
| |
|
| (11) |
This column represents the amount of shares of common stock that will be held by the Selling Stockholders after completion of this offering based on the assumptions that (a) all shares of common stock underlying Series B Convertible Preferred Stock and Common Warrants registered for sale by the registration statement of which this prospectus is part of will be sold, and (b) no other shares of common stock are acquired or sold by the Selling Stockholders prior to completion of this offering. However, the Selling Stockholders are not obligated to sell all or any portion of the shares of our common stock offered pursuant to this prospectus. |
Material Relationships with Selling Stockholders
Other than in connection with the transactions
described above and elsewhere in this registration statement, we have not had any material relationships with the Selling Stockholders
in the last three (3) years.
PLAN OF DISTRIBUTION
We are registering the
shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock and exercise of the Common Warrants to permit
the resale of these shares of common stock by the holders of the Series B Convertible Preferred Stock and the Common Warrants from time
to time after the date of this prospectus.
Each selling stockholder
of the securities and any of their pledgees, assignees, donees, transferees or other successors-in-interest may, from time to time, may
sell, transfer or otherwise dispose of any or all of their securities covered hereby on the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, or the New York Stock Exchange or any other stock exchange, quotation service or market or trading
facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholder
may use any one or more of the following methods when selling securities:
| · | ordinary brokerage transactions and transactions
in which the broker-dealer solicits purchasers; |
| · | block trades in which the broker-dealer will
attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
| · | purchases by a broker-dealer as principal and
resale by the broker-dealer for its account; |
| · | an exchange distribution in accordance with the
rules of the applicable exchange; |
| · | privately negotiated transactions; |
| · | settlement of short sales entered into after
the effective date of the registration statement of which this prospectus is a part; |
| · | in transactions through broker-dealers that agree
with the selling stockholders to sell a specified number of such securities at a stipulated price per security; |
| · | through the writing or settlement of options
or other hedging transactions, whether through an options exchange or otherwise; |
| · | a combination of any such methods of sale; or
|
| · | any other method permitted pursuant to applicable
law. |
The selling stockholders
may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available, rather than under
this prospectus. In addition, the selling stockholders may transfer the shares of common stock by other means not described in this prospectus.
Broker-dealers engaged
by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts
from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts
to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a
customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in
compliance with FINRA Rule 2121.
In connection with the
sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume.
The selling stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge
the securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or create one or more derivative securities that require the delivery
to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or
other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). The selling
stockholders may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares. The selling stockholders
may pledge or grant a security interest in some or all of the Series B Convertible Preferred Stock, the Common Warrants or shares of common
stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and
sell the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending, if necessary, the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the securities
in other circumstances, in which case the transferees, pledgees, donees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus.
The selling stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales (it being understood that the selling stockholders shall not be deemed to
be underwriters solely as a result of their participation in this offering). In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under
the Securities Act. Each selling stockholder has informed us that it does not have any written or oral agreement or understanding, directly
or indirectly, with any person to distribute the securities. At the time a particular offering of the shares of common stock is made,
a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being offered
and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to
broker-dealers.
We will pay all expenses
of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $125,000 in total, including,
without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however,
a selling stockholder will pay all underwriting discounts and selling commissions, if any. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities Act in accordance with the registration
rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against
civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled
to contribution.
We agreed to keep this
prospectus effective until the earlier of the date that the securities (i) have been sold, pursuant to this prospectus or pursuant to
Rule 144, or (ii) the date on which the securities may be resold by the selling stockholders without restriction pursuant to Rule 144
(including, without limitation, any volume or manner-of-sale limitations) and without the requirement for us to be in compliance with
the current public information under Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will
be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain
states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules
and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage
in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to
the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock
by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have
informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance
with Rule 172 under the Securities Act). All of the foregoing may affect the marketability of the shares of common stock and the ability
of any person or entity to engage in market-making activities with respect to the shares of common stock.
We will not receive any
proceeds from sales of any shares of common stock by the selling stockholders, although we will receive the exercise price of any Common
Warrants not exercised by the selling stockholders on a cashless exercise basis.
We cannot assure you
that the selling stockholders will sell all or any portion of the shares of common stock offered hereby. We are registering the resale
of shares of our common stock to provide the selling stockholders with freely tradable securities, but the registration of such shares
does not necessarily mean that any of such shares will be offered or sold by the selling stockholders pursuant to this prospectus or at
all.
To the extent required,
this prospectus may be amended and/or supplemented from time to time to describe a specific plan of distribution.
LEGAL MATTERS
Carroll Legal LLC, Denver, CO, will pass upon
the validity of the shares of common stock offered hereby.
EXPERTS
Haynie & Company, independent registered public
accounting firm, has audited the financial statements of the Company as of December 31, 2023 and for the year ended December 31, 2023,
as set forth in their report thereon appearing in Auddia Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023,
and incorporated by reference herein. Such financial statements are incorporated by reference herein in reliance upon such report, which
includes an explanatory paragraph on Auddia Inc.’s ability to continue as a going concern, given on their authority as experts in
accounting and auditing.
The financial statements of Auddia Inc. for the
year ended December 31, 2022 has been audited by Daszkal Bolton LLP, independent registered public accounting firm, as set forth in their
report thereon appearing in Auddia Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023, and incorporated by reference
herein. Such financial statements are incorporated by reference herein in reliance upon such report, which includes an explanatory paragraph
on Auddia Inc.’s ability to continue as a going concern, given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement
on Form S-1 under the Securities Act with respect to the shares of our common stock being offered by this prospectus. This prospectus,
which constitutes part of that registration statement, does not contain all of the information set forth in the registration statement
or the exhibits and schedules that are part of the registration statement. Some items included in the registration statement are omitted
from the prospectus in accordance with the rules and regulations of the SEC. For further information with respect to us and the common
stock offered in this prospectus, we refer you to the registration statement and the accompanying exhibits and schedules filed therewith.
Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the
registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text
of such contract or other document filed as an exhibit to the registration statement.
We are subject to the information and periodic
reporting requirements of the Exchange Act, and we file periodic reports, proxy statements and other information with the SEC. These periodic
reports, proxy statements and other information are available for inspection and copying at the public reference room of the SEC. The
SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that
file electronically with the SEC. The address of the SEC website is www.sec.gov.
You may access our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the SEC. Our website address is www.auddia.com. The reference to our website address does not constitute
incorporation by reference of the information contained on our website, and you should not consider information on our website to be part
of this prospectus.
You may also request a copy of these filings,
at no cost to you, by writing or telephoning us at the following address:
Auddia Inc.
Attn: Investor Relations
1680 38th Street, Suite 130
Boulder, CO 80301
Telephone: (303) 219-9771
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This prospectus is part of the registration statement
and does not contain all of the information included in the registration statement. Whenever a reference is made in this prospectus to
any contract or other document, the reference may not be complete and you should refer to the exhibits that are a part of the registration
statement for a copy of the contract or document.
We disclose important information to you by referring
you to documents that we have previously filed with the SEC or documents that we will file with the SEC in the future. The information
incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC (including any
prospectus supplement) will automatically update and supersede this information. We incorporate by reference the documents listed below
(other than documents or information deemed to have been furnished and not filed in accordance with SEC rules, unless otherwise expressly
incorporated by reference herein):
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our Annual Report on Form 10-K for the year ended December 31, 2023; |
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our Quarterly Report on
Form 10-Q for the quarter ended March
31, 2024 , June 30, 2024
and September 30, 2024; |
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our Current Reports on
Form 8-K filed with the SEC on January
26, 2024, February 2, 2024, February
27, 2024, April 15, 2024, April
29, 2024, September 12, 2024, September
13, 2024, and October 18, 2024; and |
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the description of our
securities registered pursuant to Section 12 of the Exchange Act our Registration Statement on Form 8-A (File No. 001-40071), filed
with the SEC under Section 12(b) of the Exchange Act, on February 16, 2021, including any amendment or report filed for the purpose
of updating such description. |
We also incorporate by reference all documents
that we subsequently file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (i) after the date of the initial
registration statement and prior to effectiveness of the registration statement and (ii) on or after the date of this prospectus and
prior to the termination of the offering of the shares hereunder. Nothing in this prospectus shall be deemed to incorporate information
furnished but not filed with the SEC, unless specifically noted otherwise.
Any statement made in this prospectus or in a
document incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any other subsequently filed document that also is incorporated by reference
modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
You may request a copy of the filings incorporated
herein by reference, including exhibits to such documents that are specifically incorporated by reference, at no cost, by writing or calling
us at the following address or telephone number:
Auddia Inc.
Attn: Investor Relations
1680 38th Street, Suite 130
Boulder, CO 80301
Telephone: (303) 219-9771
In addition, you may access the documents incorporated
by reference herein free of charge on the SEC’s website. See also “Where You Can Find More Information.”
Up to 5,905,898 Shares of Common Stock
AUDDIA, INC.
PROSPECTUS
November 8, 2024
Auddia (NASDAQ:AUUDW)
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Auddia (NASDAQ:AUUDW)
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