What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-01 compared with 2023-03-23 · 580 added, 500 removed, 280 unchanged (79% of the section changed)

Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

INDEX TO FINANCIAL

Annual Financial Statements

Report of Independent

Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets as of December 31, 2023 and 2022

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Board of Directors and Stockholders

To the Board of Directors and

Stockholders of Auddia, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet

of Auddia, Inc.

(the Company) as of December 31, 2023, and the related statements of operations, changes in stockholders’ equity

(deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements).

opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023,

and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted

in the United States of America.

Substantial Doubt about the Company’s

Ability to Continue as a Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the

Company has suffered recurring losses from operations and has a deficiency in stockholders’ equity that raise substantial doubt

about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public

accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit

of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control

over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control

over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Retrospective Adjustment for Reverse Stock Splits

We have audited the adjustments to the 2022 financial statements to

retrospectively apply the effects of the reverse stock split, as described in Notes 1 and 9.

In our opinion, such retrospective adjustments

are appropriate and have been properly applied.

We were not engaged to audit, review, or apply any procedures to the 2022 financial statements

of the Company other than with respect to these retrospective adjustments for the reverse stock split and, accordingly, we do not express

an opinion or any other form of assurance on the 2022 financial statements taken as a whole.

/s/ Haynie & Company

Haynie & Company

April 1, 2024

We have served as the Company’s auditor since 2023.

Independent Registered Public Accounting Firm

To the Board of Directors and

Boulder, Colorado

Opinion on the Financial

We have audited the accompanying

balance sheets of Auddia Inc.

(the “Company”) at December 31, 2022 and 2021, and the related statements of operations, changes

in stockholders’ equity and cash flows for the years ended December 31, 2022 and 2021, and the related notes (collectively referred

Opinion on the Financial Statements

We have audited, before

the effects of the adjustments to retrospectively apply the effects of the reverse stock split described in Note 1 – Description

of Business, Basis of Presentation and Summary of Significant Accounting Policies – Reverse Stock Split (Reverse Stock Split), the

accompanying balance sheet of Auddia Inc.

(the “Company”) at December 31, 2022, and the related statements of operations,

changes in stockholders’ equity and cash flows for the year ended December 31, 2022, and the related notes (collectively referred

to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position

of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years ended December

31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, before the effects of the adjustments to retrospectively apply the reverse stock split

described in Note 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies – Reverse

Stock Split (Reverse Stock Split), the financial statements present fairly, in all material respects, the financial position of the Company

at December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting

principles generally accepted in the United States of America.

We were not engaged to

audit, review, or apply any procedures to the adjustments for the retrospective effect of the Stock Split described in Note 1 –

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies – Reverse Stock Split (Reverse Stock

Split), and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments and disclosures are

appropriate and have been properly applied.

Those adjustments and disclosures were audited by Haynie & Company.

(The 2022 financial

statements before the effects of the adjustments discussed in Note 1 – Reverse Stock Split and the disclosures described in Note

6 – Share-based Compensation, Note 7 – Equity Financing – Warrants, and Note 9 – Net Loss Per Share are not presented

Going Concern Uncertainty

The accompanying financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the

Company has suffered recurring losses from operations and has a deficiency in working capital and shareholders’ equity that raise

substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in

The accompanying financial

statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements,

the Company has suffered recurring losses from operations and has a deficiency in working capital and shareholders’ equity that

raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are

the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements

based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial

statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)

(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an

understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the

Company’s internal control over financial reporting.

We conducted our audit

in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to

have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required

to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness

of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing

Our audit included performing

procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

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financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management,

Our audit also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for

We believe that our audit provides a reasonable basis for

Critical Audit Matters

The critical audit matters communicated

below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated

to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate

opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Intangible Assets Impairment

As described in Notes 1 and 2 to

the financial statements, the Company has software development costs of approximately $4.1 million at December 31, 2022.

No directly observable

market inputs are available to measure the fair value to determine if the asset is recoverable.

Therefore, an estimate is derived indirectly

and is based on a mix of cash flow and market models.

The estimate that management used in calculating the fair values depend on assumptions

specific to the nature of the markets in which its product operates with regard to the amount and timing of projected future revenues,

operating cash flows, long-term subscriber demand forecasts, actions of competitors (competing content), capital expenditures, and future

The principal considerations for

our determination that performing procedures relating to the intangible assets impairment assessment is a critical audit matter are the

significant judgment by management when developing the fair value of the intangible assets.

The critical audit matters

communicated below are matters arising from the audit of the December 31, 2022 financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements

and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Intangible Assets Impairment Assessment

As described in Notes

1 and 2 to the financial statements, the Company has software development costs of approximately $4.1 million at December 31, 2022.

directly observable market inputs are available to measure the fair value to determine if the asset is recoverable.

Therefore, an estimate

is derived indirectly and is based on a mix of cash flow and market models.

The estimate that management used in calculating the fair

values depend on assumptions specific to the nature of the markets in which its product operates with regard to the amount and timing

of projected future revenues, operating cash flows, long-term subscriber demand forecasts, actions of competitors (competing content),

capital expenditures, and future tax rates.

The principal considerations

for our determination that performing procedures relating to the intangible assets impairment assessment is a critical audit matter are

the significant judgment by management when developing the fair value of the intangible assets.

This led to a high degree of auditor judgment,

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timing of projected future cash flows.

Addressing the matter involved performing

procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures

included testing management’s process for developing the fair value estimate;

evaluating the appropriateness of the valuation techniques;

Addressing the matter

involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures included testing management’s process for developing the fair value estimate;

evaluating the appropriateness of

the valuation techniques;

testing the completeness and accuracy of underlying data used in the model;

and evaluating the significant assumptions used by management,

including the amount and timing of projected future cash flows.

Evaluating management’s assumptions related to the amount and timing

of projected future cash flows and evaluating whether the assumptions used by management were reasonable considering the current and past

performance of the intangible assets, the consistency with external market and industry data, and whether these assumptions were consistent

with evidence obtained in other areas of the audit.

and evaluating the significant assumptions

used by management, including the amount and timing of projected future cash flows.

Evaluating management’s assumptions related

to the amount and timing of projected future cash flows and evaluating whether the assumptions used by management were reasonable considering

the current and past performance of the intangible assets, the consistency with external market and industry data, and whether these assumptions

were consistent with evidence obtained in other areas of the audit.

/s/ Daszkal Bolton LLP

Daszkal Bolton LLP

We have served as the Company’s

auditor since 2020

Boca Raton, Florida

March 20, 2023

We served as the Company’s

auditor from 2020 to March 2023.

Balance Sheets

December 31, 2022, and 2021

December 31, 2023

December 31, 2022

Current assets:

Accounts receivable, net

Prepaid insurance

Total current assets

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Accounts payable and accrued liabilities

Notes payable to investors

Notes payable to related party, net of debt issuance costs

Stock awards liability

Total current liabilities

Commitments and contingencies

Total liabilities

Commitments and contingencies (Note 5)

Shareholders' equity:

Preferred stock - $ 0.001 par value, 10,000,000 authorized and 0 shares issued and outstanding

Common stock - $ 0.001 par value, 100,000,000 authorized and 12,654,949 and 12,416,408 shares issued and outstanding at December 31, 2022 and December 31, 2021

Common stock - $ 0.001

par value, 100,000,000 authorized and 854,162

and 506,198 shares issued and outstanding December

31, 2023 and December 31, 2022, respectively (1)

Additional paid-in capital

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Total liabilities and shareholders' equity

(1) The Company’s common stock outstanding as of December 31, 2023 and 2022 has been retroactively restated for the effect of the

25-for-1 reverse stock split.

See Accompanying Notes to Financial Statements.

Statements of Operations

For the Years Ended December 31, 2022, and 2021

Year Ended December 31,

Operating expenses:

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Other (expense) income:

Finance charge - convertible debt

( 8,141,424 )

Extinguishment of PPP loan

Interest expense

( 1,331,128 )

Interest income

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( 1,331,128 )

Net loss before taxes

Loss before income taxes

( 8,807,496 )

( 6,897,446 )

Provision for income taxes

$ ( 8,807,496 )

$ ( 6,897,446 )

Net loss per share attributable to common shares

Net loss per share attributable to common stockholders

Basic and diluted

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Basic and diluted

(1) The Company’s weighted average common shares outstanding for the years ended December 31, 2023 and 2022 have been retroactively

restated for the effect of the 25-for-1 reverse stock split.

See Accompanying Notes to Financial Statements.

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For the Years Ended December 31, 2023 and 2022

Year Ended December 31, 2023

Balance, December 31, 2022

$ ( 71,735,834 )

$ ( 13,103,250 )

Issuance of common shares

Exercise of Series A Warrants

Exercise of Pre-IPO Warrants

Conversion of debt obligations

Issuance of common shares, net of costs

Adjustments related to reverse stock split

Exercise of Restricted Stock Units

Issuance of warrants

Share-based compensation

Revaluation of share-based compensation liability

Cancelled shares

( 8,807,496 )

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$ ( 80,543,330 )

Year Ended December 31, 2022

Balance, December 31, 2021

$ ( 64,838,389 )

Issuance of common shares

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$ ( 71,735,834 )

(1) The Company’s changes in stockholders’ equity for the years ended December 31, 2023 and 2022 has been retroactively restated

for the effect of the 25-for-1 reverse stock split.

See Accompanying Notes to Financial Statements.

Statements of Cash Flows

For the Years Ended December 31, 2022, and 2021

Year Ended December 31,

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$ ( 6,897,446 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Finance charge associated with debt issuance cost

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Share-based compensation expense

Extinguishment of PPP loan

Change in assets and liabilities:

Accounts receivable

Prepaid insurance

Prepaids and other non-current assets

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Cash flows from financing activities:

Proceeds from PPP Loan

Proceeds from issuance of promissory notes payable, net of OID

Repayment of deferred salary

Repayments to Line of Credit

( 6,000,000 )

Repayments of related parties notes payable and deferred salary

Net settlement of share-based compensation liability

Proceeds from related party debt

Proceeds from issuance of common shares

Deferred offering costs capitalized

Net cash provided by financing activities

Net (decrease) increase in cash

Net decrease in cash

( 4,683,857 )

Cash, beginning of year

Cash, end of year

Cash and restricted cash, end of year

Supplemental disclosures of cash flow information:

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Supplemental disclosures of non-cash activity:

Shares issued for conversion of indebtedness

PPP loan extinguishment

Reclassification of deferred offering cost

Original issue discount and issuance of warrants on related party debt

See Accompanying Notes to Financial Statements.

Notes to Financial Statements

For the Year Ended December 31, 2022

Note 1 – Description of Business, Basis of Presentation and Summary

of Significant Accounting Policies

For the Years Ended December 31, 2023 and 2022

Note 1 – Description of Business, Basis of Presentation

and Summary of Significant Accounting Policies

Description of Business

Auddia Inc., formerly Clip Interactive, LLC, (the

“Company”, “Auddia”, “we”, “our”) is a technology company that is reinventing how consumers

engage with audio through the development of a proprietary AI platform for audio and innovative technologies for podcasts.

Clip Interactive,

LLC was initially formed as a Colorado limited liability company on January 14, 2012, and on November 25, 2019 changed its trade name

On February 16, 2021, the Company completed an initial

public offering (the “IPO”) of 3,991,818 units, at $4.125 per unit, consisting of one share of common stock and one warrant

to purchase one share of common stock at an exercise price of $4.54 per share.

In addition, the underwriters exercised their option to

purchase 598,772 Series A warrants to cover over-allotments and were issued 319,346 in representative warrants at an exercise price of

$5.15625 per share.

After deducting underwriter’s commissions and expenses, the Company received net proceeds of approximately $15.1

million and its common stock commenced trading on Nasdaq under the ticker symbol “AUUD”.

Concurrently with the IPO, holders

of the Company’s promissory notes, convertible notes, and related party notes, along with accrued interest, were converted into

6,814,570 shares of the Company’s common stock.

Concurrently with the IPO the Company converted from

a Colorado limited liability company to a Delaware corporation.

This accounting change has been given retrospective treatment in the condensed

financial statements.

Auddia Inc., (the “Company”, “Auddia”,

“we”, “our”) is a technology company that is reinventing how consumers engage with audio through the development

of a proprietary AI platform for audio and innovative technologies for podcasts.

The Company is incorporated in Delaware and headquartered

Basis of Presentation

The accompanying financial statements have been prepared

in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The accompanying financial statements have been

prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Reverse Stock Split

The Company filed an amendment to its Certificate

of Incorporation with the Secretary of State in Delaware which became effective as of 5:00 P.M.

Eastern Time on February 26, 2024.

a result, every twenty-five (25) issued shares of common stock were automatically combined into one share of common stock.

Shares of the Company’s common stock were

assigned a new CUSIP number (05072K 206) and began trading on a split-adjusted basis on February 27, 2024.

The reverse stock split will not change the authorized

number of shares of the Company’s common stock.

No fractional shares will be issued and any fractional shares resulting from the

reverse stock split will be rounded up to the nearest whole share.

Therefore, stockholders with less than 25 shares will receive one

share of stock.

The reverse stock split will apply to the Company’s

outstanding warrants, stock options and restricted stock units.

The number of shares of common stock into which these outstanding securities

are convertible or exercisable will be adjusted proportionately as a result of the reverse stock split.

The exercise prices of any outstanding

warrants or stock options will also be proportionately adjusted in accordance with the terms of those securities and the Company’s

equity incentive plans.

Use of Estimates

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Actual results could differ from those estimates.

The financial statements include some amounts that

are based on management's best estimates and judgments.

The financial statements include some amounts

that are based on management's best estimates and judgments.

The most significant estimates relate to valuation of capital stock, warrants

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2023 or 2022.

The Company maintains cash deposits at several financial

institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000.

The Company’s cash balance may at times

exceed these limits.

At December 31, 2022 and December 31, 2021, the Company had approximately $ 1.4 million and $ 5.9 million , respectively,

in excess of federally insured limits.

The Company maintains cash deposits at several

financial institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000.

The Company’s cash balance

may at times exceed these limits.

At December 31, 2023 and December 31, 2022, the Company had $ 554,556 and $ 1,411,434 , respectively, in

excess of federally insured limits.

The Company continually monitors its positions with, and the credit quality of, the financial institutions

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of accumulated depreciation.

Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned

assets, ranging from two

to five years .

Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets,

ranging from two to five years .

Software Development Costs

The Company accounts for costs incurred in the development

of computer software as software research and development costs until the preliminary project stage is completed, management has committed

to funding the project, and completion and use of the software for its intended purpose is probable.

The Company ceases capitalization of development costs

once the software has been substantially completed and is available for its intended use.

Software development costs are amortized over

a useful life estimated by the Company’s management of five years.

Costs associated with significant upgrades and enhancements that

result in additional functionality are capitalized.

Capitalized costs are subject to an ongoing assessment of recoverability based on

anticipated future revenues and changes in software technologies.

The Company accounts for costs incurred in the

development of computer software as software research and development costs until the preliminary project stage is completed, management

has committed to funding the project, and completion and use of the software for its intended purpose is probable.

The Company ceases capitalization of development

costs once the software has been substantially completed and is available for its intended use.

Software development costs are amortized

over a useful life estimated by the Company’s management of three years.

Costs associated with significant upgrades and enhancements

that result in additional functionality are capitalized.

Capitalized costs are subject to an ongoing assessment of recoverability based

on anticipated future revenues and changes in software technologies.

Unamortized capitalized software development costs

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Deferred Offering Costs

In November 2022, the Company entered into a

Common Stock Purchase Agreement.

Pursuant to such, the Company has the right, but not the obligation, to require the investor

to purchase up to $10,000,000 in aggregate gross purchase price of newly issued shares of the Company common stock, subject to

eligibility under the Company’s Form S-3.

The Company’s right to sell shares under this agreement extends to December

In consideration for the commitments by the investor under the agreement, the Company issued 140,186

shares of common stock to the investor.

The Company recognized $ 222,896

of deferred offering costs relating to the issuance of these shares.

The Company deferred direct and incremental costs

associated with its IPO that occurred in February 2021.

The Company capitalized deferred offering costs of $ 142,049 during the year ended

December 31, 2021, which was netted against IPO proceeds in February 2021.

Deferred offering costs consisted principally of legal, advisory,

and consulting fees incurred in connection with the formation and preparation for the IPO.

In November 2022, the Company entered into a Common Stock Purchase Agreement.

Pursuant to such, the Company has the right, but not the obligation, to require the investor to purchase up to $10,000,000 in aggregate

gross purchase price of newly issued shares of the Company common stock, subject to eligibility under the Company’s Form S-3.

Company’s right to sell shares under this agreement extends to December 2023.

In consideration for the commitments by the investor

under the agreement, the Company issued 5,607 shares of common stock to the investor.

The Company recognized $ 222,896 of deferred offering

costs relating to the issuance of these shares.

Long-Lived Assets

The Company reviews its tangible and limited

lived intangible long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of

the asset may not be recovered.

If a potential impairment is indicated, the Company compares the carrying amount of the asset to the

undiscounted future cash flows associated with the asset.

In the event the future cash flows are less than their carrying value, a

loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset.

determined long-lived assets were no t

impaired at December 31, 2022 and 2021.

The Company accounts for income taxes using an asset

and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of

A valuation allowance is established to reduce deferred tax assets to their estimated realizable value when, in the opinion of

management, it is more likely than not that some portion or all of the deferred income tax assets will not be realized in the future.

The Company recognizes benefits of uncertain tax positions

if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest

amount of benefit that is more likely than not to be realized upon the ultimate settlement.

The Company’s policy is to recognize

interest and penalties related to unrecognized tax benefits as a part of income tax expense.

The Company reviews its tangible and limited lived

intangible long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset

may not be recovered.

If a potential impairment is indicated, the Company compares the carrying amount of the asset to the undiscounted

future cash flows associated with the asset.

In the event the future cash flows are less than their carrying value, a loss is recognized

based on the amount by which the carrying value exceeds the fair value of the long-lived asset.

The Company determined long-lived assets

were no t impaired at December 31, 2023 and 2022.

The Company accounts for income taxes using an

asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences

A valuation allowance is established to reduce deferred tax assets to their estimated realizable value when, in the opinion

of management, it is more likely than not that some portion or all of the deferred income tax assets will not be realized in the future.

The Company recognizes benefits of uncertain tax

positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits,

as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement.

The Company’s policy

is to recognize interest and penalties related to unrecognized tax benefits as a part of income tax expense.

Prior to the Company’s conversion to a Delaware

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There is no revenue recognized for unpaid trial subscriptions.

Customers may pay for the services in advance of the

performance obligation and therefore these prepayments are recorded as deferred revenue.

The deferred revenue is recognized as revenue

in our statement of operations as the services are provided.

Customers may pay for the services in advance

of the performance obligation and therefore these prepayments are recorded as deferred revenue.

The deferred revenue is recognized as

revenue in our statement of operations as the services are provided.

Advertising Costs

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fair value of the awards on the date of grant.

Compensation expense for all share-based awards is

based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period).

Compensation expense for all share-based awards

is based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period).

The Company records share-based compensation expense related to non-employees over the related service periods.

Net Loss per Share

Basic loss per share common share is calculated based

on the weighted-average number of common shares outstanding in accordance with FASB ASC Topic 260, Earnings per Share .

net (loss) income per share is calculated based on the weighted-average number of common shares outstanding plus the effect of dilutive

potential common shares.

When the Company reports a net loss, the calculation of diluted net loss per share excludes potential common

shares as the effect would be anti-dilutive.

Potential common shares are composed of shares of common issuable upon the exercise of options

and warrants.

Basic loss per share common share is calculated

based on the weighted-average number of common shares outstanding in accordance with FASB ASC Topic 260, Earnings per Share .

net loss per share is calculated based on the weighted-average number of common shares outstanding plus the effect of dilutive potential

common shares.

When the Company reports a net loss, the calculation of diluted net loss per share excludes potential common shares as

the effect would be anti-dilutive.

Potential common shares are composed of shares of common issuable upon the exercise of options and

Liquidity, Capital Resources and Going Concern

Our existing cash of $1.66 million at December 31, 2022 will only be sufficient

to fund our current operating plans into the second quarter of 2023.

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.

Our existing cash of $ 804,556 at December 31,

2023 will only be sufficient to fund our current operating plans into February 2024.

The Company secured approximately $3.6 million of

additional financing in February and March 2024, but will need to obtain additional financing to pay off debt and to extend current operations

into the second quarter of 2024 (see Note 10).

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.

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.

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

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Emerging Growth Company Status

The Company is an emerging growth company, as defined

in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

Under the JOBS Act, emerging growth companies can delay

adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply

to private companies.

The Company has elected to use this extended transition period for complying with certain new or revised accounting

standards that have different effective dates for public and private companies.

Practical expedients and exemptions

We expensed sales commissions when incurred because

the duration of the contracts for which we paid commissions were less than one year.

These costs were included in the sales and marketing

line item of our Statements of Operations.

Currently the Company does not have any significant acquisition costs which have been incurred

associated with the acquisition of its customer contracts and therefore, no deferred customer acquisition costs have been recorded.

We did not disclose the value of unsatisfied performance

obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at

the amount to which we had the right to invoice for services performed.

Note 2 – Property & Equipment and

Software Development Costs

Property and equipment and software development costs

consisted of the following as of:

The Company is an emerging growth company, as

defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

Under the JOBS Act, emerging growth companies

can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards

apply to private companies.

The Company has elected to use this extended transition period for complying with certain new or revised

accounting standards that have different effective dates for public and private companies.

Note 2 – Property & Equipment

and Software Development Costs

and equipment and software development costs consisted of the following as of:

Schedule of property, equipment and software development costs

December 31, 2023

December 31, 2022

Computers and equipment

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The Company recognized depreciation expense of

and $ 19,919 for the years ended December 31, 2022, and 2021, respectively related to property and equipment and amortization expense of

$ 956,144 and $ 146,737 for the years ended December 31, 2022, and 2021, respectively related to software development costs.

3 – Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of

the following:

$ 25,391 and $ 35,495 for the years ended December 31, 2023, and 2022, respectively related to property and equipment and amortization expense

of $ 1,815,447 and $ 956,144 for the years ended December 31, 2023 and 2022, respectively related to software development costs.

Note 3 – Accounts Payable and Accrued

Accounts payable and accrued liabilities consist

of the following:

Schedule of accounts payable and accrued liabilities

December 31, 2023

December 31, 2022

Accounts payable and accrued liabilities

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Accrued interest

Accounts payable and accrued liabilities

Note 4 – Line of Credit

On April 10, 2018, the Company entered into a

line of credit with a financial institution, which was amended in July 2019 and March 2021.

The principal balance was repaid in full

on July 8, 2021.

Interest expense for the year ended December 31, 2021 was $ 66,412 .

The line of credit was collateralized by all assets

of the Company, including $2 million of cash held in a control account at the lender.

The Company also maintained a minimum balance at

the lender to cover two months of interest payments.

Prior to our IPO, the line of credit was collateralized by $6,000,000 of cash assets

of two shareholders held in control accounts at the lender.

Following the Company’s IPO in February 2021

the line of credit was amended and the Company paid down the outstanding principal balance on its bank line of credit from $6 million

to $2 million and the available principal balance for the line of credit was reduced from $6 million to $2 million.

Further, the $6 million

of cash collateral previously provided by the two shareholders was released.

The remaining principal balance of $2 million was repaid

in full and the line of credit was terminated on July 8, 2021.

The shareholder who previously provided the $2

million control account had a collateral agreement with the Company which is described in Note 5.

This agreement was terminated in March

Note 5 – Convertible Notes Payable, Notes

Payable to Related Parties and Deferred Salary and Promissory Notes

Convertible notes payable

During the year ended December 31, 2020,

existing investors purchased $ 404,601 of

our convertible notes.

These convertible notes accrued interest at 6.0 %

per year and were scheduled to mature on December

In conjunction with the February 2021 IPO, the Notes automatically converted into 2,066,176 shares

of common stock at discounts ranging from 50% to 75% of the IPO price.

Interest expense for the year ended December 31, 2021, was

Accrued fees to a related party

The Company had an agreement with a shareholder to

provide collateral for a bank line of credit described in Note 4 – Line of Credit.

The amount of the cash collateral provided by

the shareholder to the bank was $2.0 million.

The collateral agreement required a commitment to pay collateral fees of $710,000 (comprised

of annual interest of $660,000 plus the $50,000 renewal fee) to the shareholder and issue 3,454 common stock warrants.

In January 2019,

in connection with the collateral agreement, the Company converted accrued fees of $ 725,000 into an unsecured note payable, which bore

interest at 33 % annually and had a maturity date of December 31, 2021 .

The fees that accrued on the collateral arrangement were 33% percent

of the collateral amount annually plus an annual renewal fee of $50,000.

Interest expense for the year ended December 31, 2021, $ 208,727 .

This collateral agreement terminated in March 2021.

In conjunction with the February 2021 IPO, the notes

payable and accrued interest due to this shareholder were converted to 1,667,859 shares of common stock.

Promissory notes payable

During the twelve months ended December 31, 2020,

the Company issued, to a number of existing shareholders, in four separate tranches, $ 1,857,764 of Promissory Notes that accrue interest

at a rate of 6 % per year and were scheduled to mature on December 31, 2021 .

When issued, the notes incorporated the following attributes:

interest on the Notes accrue at 6% and upon the successful completion of a qualified IPO by December 31, 2021, the notes and accrued interest

would convert into equity at a per share valuation equal to $40.0 million.

In addition, each investor in the Promissory Notes would receive

shares and warrants based on a formula that takes into account the number of shares and warrants the investor owned before the investment

in these Promissory Notes, as well as a portion of the bonus allocation of 1,038,342 shares made available to the investors.

expense for the year ended December 31, 2021, was $ 14,454 .

In conjunction with the February 2021 IPO, all of

the Promissory Notes collectively converted into 3,080,535 shares of common stock.

The Company recognized a finance charge to interest

expense of $ 8,141,424 related to the conversion of the convertible notes, notes payable to related parties and promissory notes during

the year ended December 31, 2021.

Note 6 – Notes Payable

Notes payable to related parties and deferred salary

An executive officer of the Company agreed to defer

receipt of compensation to preserve liquidity in the Company.

The accumulated amount of compensation owed to this executive officer was

approximately $ 631,000 at December 31, 2020.

The Company paid this deferred compensation in the first quarter of 2021.

During 2019, the Company issued notes payable (the

“Notes”) to three related parties for $ 80,000 , $ 200,000 , and $ 50,000 , respectively.

The Notes did not accrue interest or have

a stated maturity date.

The outstanding note payable for $ 80,000 was repaid in January 2020.

In December 2019, the two other note holders

elected to convert their notes into convertible Notes due December 31, 2021.

Two other existing investors, who were owed a total of $17,197

for services by the Company, also agreed to convert their payables into convertible Notes.

During 2019 the Company issued a note payable

to a related party for consulting services incurred by the Company in the amount of $ 486,198 .

As of December 31, 2020, the outstanding

balance for consulting services was $ 440,904 .

The Company paid these Notes in the first quarter of 2021.

In February 2020, the Company obtained a new $500,000

short term loan from the same related party.

The Company was advanced $485,000, net of $15,000 in closing fees, and immediately placed

$140,741 into an escrow account, owned and controlled by the shareholder to provide funds for the scheduled repayments.

Repayment of the

principal and loan financing fee occurs through weekly payments of $17,593 until the loan and financing fee is paid in full.

financing fee increases with the length of the payback period and was maximized at $165,000 after month five.

The outstanding balance

was repaid in February 2021.

In November 2022, the Company entered into a

Secured Bridge Note (“Note”) financing with an existing stockholder of the Company.

The principal amount of the Note is

Total accounts payable and accrued liabilities

Note 4 – Notes Payable to Related

Party, net of debt issuance costs

During November 2022, the Company entered

into a Secured Bridge Note (the “Prior Note”) financing with an accredited investor and existing shareholder of the

The Prior Note had a principal amount of $ 2,200,000 ,

including an original issue discount of $ 200,000 .

The Note bears interest at an annual rate of 10 %

and matures in May 2023.

The Note is secured by a lien on substantially all of the Company’s assets.

At maturity, the lender

has the option to convert any original issue discount and accrued but unpaid interest into shares of the Company’s common

stock at a fixed conversion price of $ 1.23

The conversion right is available to the lender at the earlier of (i) maturity, or (ii) payback of all the principal.

connection with the Note financing, the Company issued 300,000

common stock warrants with a five-year term and an exercise price of $ 2.10

The warrants were valued at $ 361,878 , which was recorded as an additional debt discount.

The Company has the option to

extend the maturity date by six months to November 2023.

In the event of an extension, the interest rate on the Note will increase

to 20% and the Company will issue to the lender an additional 300,000 warrants.

As of December 31, 2022, the balance of the Note,

net of debt issuance costs, was $ 1,775,956 .

Interest expense related to the Note for the year ended December 31, 2022, was $ 165,945 .

Cares Act Paycheck Protection Program loan

In April 2020, the Company entered into a promissory

note evidencing an unsecured loan (the “First Loan”) in the amount of $ 268,662 made to the Company under the Paycheck Protection

Program (the “PPP”).

In January 2021, the Company entered into a second promissory note (the “Second Loan” or

combined with the first loan, the “PPP Loans”) of $ 267,482 under the PPP.

The PPP was established under the CARES Act and

is administered by the U.S.

Small Business Administration.

The First Loan was set to mature in April 2022 and

the Second Loan was set to mature in January 2023.

The PPP Loans bore interest at a rate of 1% per annum.

Beginning November 2020, the

Company was required to make 18 monthly payments of principal and interest in the amount of $14,370 related to the First Loan.

Loans may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

The proceeds from the Loans may only be

used for payroll costs (including benefits), interest on mortgage obligations, rent, utilities and interest on certain other debt obligations.

The PPP Loans contained customary events of default

relating to, among other things, payment defaults, making materially false and misleading representations to the lender or breaching the

terms of the Loan documents.

The occurrence of an event of default will result in an increase in the interest rate to 18% per annum and

provides the lender with customary remedies, including the right to require immediate payment of all amounts owed under the PPP Loans.

Pursuant to the terms of the CARES Act and the PPP,

the Company applied for forgiveness for both the PPP Loans.

On June 15, 2021, the Company received confirmation that the First Loan was

approved for forgiveness and the Company recorded $ 268,662 in PPP loan extinguishment to other income during the year ended December 31,

On November 2, 2021, the Company received confirmation that the Second Loan was approved for forgiveness and the Company recorded

$ 267,482 in PPP loan extinguishment to other income during the year ended December 31, 2021.

The amount eligible for forgiveness was based

on the amount of Loan proceeds used by the Company (during the eight-week period after the lender makes the first disbursement of Loan

proceeds) for the payment of certain covered costs, including payroll costs (including benefits), interest on mortgage obligations, rent

and utilities, subject to certain limitations and reductions in accordance with the CARES Act and the PPP.

The Prior Note bore interest at an annual stated interest rate of 10% with an original maturity date of May of 2023.

The Prior Note

is secured by a lien on substantially all of the Company’s assets.

At maturity, the lender had the option to convert the

original issue discount and accrued but unpaid interest into shares of the Company’s common stock at a fixed conversion price

of $30.75 per share.

The conversion option was available to the lender at the earlier of (i) maturity, or (ii) payback of all the

The embedded conversion option was not accounted for separately, in accordance with the guidance outlined in ASC 815-40,

as it was considered indexed to the Company’s shares.

The Company had the option to extend the maturity date by six months to

November 2023.

In the event of an extension, the Company will issue additional warrants, and the interest rate on the Note will

increase to 20%.

In connection with the Prior Note financing, the

Company issued 12,000 common stock warrants with a five-year term at an exercise price of $52.50 per share.

At the time of issuance, the

common stock warrants were valued at $ 361,878 and recorded as a debt discount to the Prior Note.

The issued common stock warrants were

classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

During April 2023, the Company entered into an

additional Secured Bridge Note (the “New Note”) financing with the same accredited investor and significant existing shareholder.

The New Note had a principal amount of $ 825,000 , including an original issue discount of $ 75,000 .

The New Note bore interest at an annual

stated interest rate of 10% with an original maturity date of July 2023.

The New Note is secured by a lien on substantially all of the

Company’s assets.

At maturity, the lender had the option to convert the original issue discount and accrued but unpaid interest

into shares of the Company’s common stock at a fixed conversion price of $52.50 per share.

The conversion option was available to

the lender at the earlier of (i) maturity, or (ii) payback of all the principal.

The embedded conversion option was not accounted for

separately, in accordance with the guidance outlined in ASC 815-40, as it was considered indexed to the Company’s shares.

In connection with the New Note financing, the

Company issued 26,000 common stock warrants with a five-year term at an exercise price of $52.50 per share, from which 13,000 common

stock warrants were exercisable immediately and were exercisable in the event that the loan term is extended.

At the time of issuance,

the common stock warrants were valued at $ 252,940 , which was recorded as an additional debt discount to the New Note.

The issued common

stock warrants were classified as equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

During April 2023, the Company also modified the

terms of the Prior Note and cancelled the original 12,000 common stock warrants issued with the Prior Note.

The Company recognized the

modification in accordance with ASC 815-40-35, which resulted in the recognition of debt discount in the amount of $ 35,981 .

the cancelled common stock warrants, the Company issued 24,000 new common stock warrants with a five-year term at an exercise price of

$ 52.50 per share.

From the newly issued 24,000 new common stock warrants, 12,000 common stock warrants were fully vested and immediately

exercisable, while the remaining 12,000 common stock warrants remained unvested.

The issued common stock warrants were classified as

equity as they were indexed to the Company’s shares in accordance with ASC 815-40.

In May of 2023, the Company renegotiated with

the lender an extension of the maturity date of the Prior Note for six months to November 2023 with an increased annual interest rate

of 20% and issued an additional 12,000 common stock warrants to the lender.

The additional common stock warrants were valued at $ 94,083

and recorded as an additional debt discount.

The issued common stock warrants were classified in equity as they were considered indexed

to the Company’s shares in accordance with ASC 815-40.

In connection with this extension, the 12,000 outstanding unvested warrants

became vested and exercisable.

On July 31, 2023, the Company extended the maturity

date of the New Note to November 30, 2023.

In connection with such extension, 13,000 outstanding unvested common stock warrants became

vested and exercisable.

There was no change in the application of the accounting under ASC

As of December 31, 2023, and December 31, 2022,

the balance of the Prior Note, net of debt issuance costs, was $ 2,200,000

and $ 1,775,956 ,

respectively.

Interest expense related to the Prior Note, including interest incurred, amortization of the debt discount, and the warrant

amortization for the year ended December 31, 2023, was $ 868,084 .

As of December 31, 2023, the balance of the New Note issued in April 2023, net of debt issuance costs, was $ 825,000 .

Interest expense related to the New Note, including interest incurred, amortization of the debt discount, and the warrant amortization

for the year ended December 31, 2023 was $ 457,044 .

The Company is currently

in discussions with the accredited investor regarding an agreement where (i) the Company would agree to repay the $2.75 million principal

of the bridge financing out of the proceeds of a next round financing, and (ii) the accrued interest and original issue discount on the

bridge financing would be converted into equity securities.

Note 5 – Commitments and Contingencies

Operating Lease

In April 2021, the Company entered into a lease agreement

for office space in Boulder, Colorado comprising of 8,639 square feet.

The lease commenced on May 15, 2021, and terminated after 12 months.

The lease had an initial base rent of $7,150 per month, with the first 15 days rent free and included three separate six month renewal

options, subject to fixed rate escalation increases.

In November 2022, the Company amended the lease reducing the square footage rented

to 2,160 with a base rent of $4,018 per month.

The amended lease terminates after 13 months.

The Company previously leased approximately

3,000 square feet of office space that expired on April 30, 2021.

Rent expense was $ 104,223 and $ 75,336 for the years

ended December 31, 2022, and 2021, respectively.

In the normal course of business, the Company is party

to litigation from time to time.

The Company maintains insurance to cover certain actions and believes that resolution of such litigation

will not have a material adverse effect on the Company.

Contingencies

pre-IPO investor has contacted the Company claiming damages caused by alleged acts and omissions arising from a private financing by

2021, the Company entered into a lease agreement for office space in Boulder, Colorado comprising 8,639 square feet.

The lease commenced

on May 15, 2021, and terminated after 12 months.

The Company subsequently extended the lease through November 2022.

In November 2022,

the Company amended the lease, reducing the square footage rented to 2,160 with a base rent of $4,018 per month, which expired on December

Rent expense, as part of general and administrative expenses as included in the Condensed Statement of Operations, was $ 61,724 and

$ 104,223 for the years ended December 31, 2023, and 2022, respectively.

In the normal course of business, the Company

is party to litigation from time to time.

The Company maintains insurance to cover certain actions and believes that resolution of such

litigation will not have a material adverse effect on the Company.

There are no active litigations as of the date the financial statements

However, a pre-IPO investor has contacted the Company claiming damages caused by alleged

acts and omissions arising from a private financing by the Company.

No complaint has been filed by the investor.

The alleged damages asserted by the investor are less than

approximately $300,000.

The Company believes it has meritorious defense to the investor's claims.

Note 8 - Share-based Compensation

The alleged damages asserted

by the investor are less than approximately $300,000.

The outcome of the complaint was neither probable or estimable as of the date the

financial statements were issued.

6 - Share-based Compensation

Stock Options

The following table presents the activity for stock

options outstanding:

The following table presents the activity for

stock options outstanding:

Schedule of stock option activity

Exercise Price

Weighted Average Exercise Price

Outstanding - December 31, 2021

3 unchanged sentences

Outstanding - December 31, 2023

The following table presents the composition of options

outstanding and exercisable:

Options outstanding and exercisable

The following table presents the composition

of options outstanding and exercisable:

Schedule of options outstanding and exercisable

Options Outstanding **

3 unchanged sentences

________________________

* Price and Life reflect the weighted average exercise price and weighted

average remaining contractual life, respectively.

Price and Life reflect the weighted average exercise price and weighted average remaining contractual life, respectively.

The Company’s options summarized above have been retroactively restated

for the effect of the 25-for-1 reverse stock split.

During the year ended December 31, 2023, the Company

2 unchanged sentences

to certain vesting requirements.

The assumptions used in the Black-Scholes valuation

method for these options which were issued in 2023 is as follows:

Schedule of assumptions

Risk free interest rate

3.76 % - 4.24 %

Expected term (years)

Expected volatility

Expected dividends

These assumptions listed above for 2023 were derived

using i) the risk free interest rate published by the federal reserve on the date of grant, ii) the expected term used is the average

of the contractual term plus the weighted average vesting term, iii) the volatility was derived using rates from third-party valuation

reports of other financial instruments for the applicable quarter and iv) the expected dividends rate used is taken from the applicable

option award agreement.

Restricted Stock Units

The following table presents the activity for restricted

stock units outstanding:

Schedule of restricted stock outstanding

Restricted Stock

Average Exercise

The following table presents the activity for

restricted stock units outstanding:

Schedule of restricted stock units outstanding

Weighted Average

Outstanding - December 31, 2021

7 unchanged sentences

vesting requirements.

The Company recognized share-based compensation expense

related to stock options and restricted stock units of $ 1,001,889 and $ 1,237,481 for the years ended December 31, 2022, and 2021, respectively.

The Company recognized share-based compensation

expense related to stock options and restricted stock units of $ 1,025,420 and $ 1,001,889 for the years ended December 31, 2023 and 2022,

respectively.

The remaining unvested share-based compensation expense of $ 717,274 is expected to be recognized over the next 48 months.

The following table presents the activity for warrants

Schedule of warrant activity

Average Exercise

Note 7 – Equity Financings

Equity Line Sales

of Common Stock

On November 14, 2022,

the Company entered into a Common Stock Purchase Agreement (the “White Lion Purchase Agreement”) with White Lion Capital,

LLC, a Nevada limited liability company (“White Lion”) for an equity line facility.

In April 2023 and June

2023, the Company closed on three sales of Common Stock under the White Lion Purchase Agreement.

As a result, the Company issued an aggregate

of 94,461 common shares and received aggregate proceeds of approximately $ 1.3 million .

Any proceeds that the

Company receives under the White Lion Purchase Agreement are expected to be used for working capital and general corporate purposes.

The aggregate number of shares of common stock

that the Company can sell to White Lion under the White Lion Purchase Agreement (including the Commitment Shares) may in no case exceed

100,068 shares of the common stock (which is equal to approximately 19.99% of the shares of the common stock outstanding immediately

prior to the execution of the White Lion Purchase Agreement) (the “Exchange Cap”), unless shareholder approval is obtained

to issue purchase shares above the Exchange Cap, in which case the Exchange Cap will no longer apply.

The Company recognized all offering costs related

to the equity line of credit as deferred offering costs in accordance with the guidance in ASC 835-30-S45.

Sale of Common Shares

(S-3 offering)

In June 2023, the Company sold 189,400 shares

of common stock in a registered public offering with net proceeds of $ 2.7 million .

Replacement Equity

Line with White Lion

On November 6, 2023, the Company entered into

a new Common Stock Purchase Agreement and a related registration rights agreement with White Lion.

Pursuant to the new Common Stock Purchase

Agreement, the Company has the right, but not the obligation to require White Lion to purchase, from time to time until December 31, 2024,

up to $10,000,000 in aggregate gross purchase price of newly issued shares of the Company’s common stock, subject to certain limitations

and conditions set forth in the Common Stock Purchase Agreement.

In connection with the new Common Stock Purchase Agreement, the parties

agreed to terminate the previous Common Stock Purchase Agreement with White Lion.

See Note 10 for subsequent activity related to the equity

line with White Lion.

The following table presents the activity for

warrants outstanding:

warrants outstanding

Weighted Average Exercise Price

Outstanding – December 31, 2021

Forfeited/cancelled/restored

( 1,096,023 )

Outstanding - December 31, 2022

1 unchanged sentence

Outstanding - December 31, 2023

In connection with the February 2021 IPO, the

Company issued 3,991,818 warrants to purchase shares of common stock and issued to 598,772 warrants to its underwriters to cover over-allotments.

The Company also issued 319,346 of representative warrants to its underwriters to purchase shares of common stock and these representative

warrants contain a cashless exercise feature.

During the year ended December 31, 2021, certain holders

of our publicly traded Series A Warrants exercised 1,091,692 warrants for 1,091,692 million shares of common stock at the cash exercise

price of $ 4.5375 per share.

In addition, certain holders of our Pre-IPO warrants exercised 4,331 warrants for 2,887 shares of common stock

at the net exercise price of $ 0.87 per share.

During the year ended December 31, 2022, in connection

with the issuance of a Secured Bridge Note, the Company issued 300,000 warrants to purchase shares of common stock at the exercise price

of $ 2.10 per share.

During the year ended December 31, 2022, 148 warrants

were exercised using the cashless option into 112 shares of common stock.

All the outstanding warrants are exercisable and have

a weighted average remaining contractual life of approximately 3 years as of December 31, 2022.

Note 9 – Stockholders’ Equity

On February 17, 2021, the Company converted its LLC

membership equity units into 485,441 shares of Common Stock with a $0.001 par value.

The conversion has been given retrospective treatment.

Note 10 – Income Taxes

For the year ended December 31, 2022 and 2021, the

Company recorded no income tax benefit for the net operating losses incurred during the year, due to the uncertainty of realizing a

benefit from those items.

During the year

ended December 31, 2022, in connection with the issuance of the Prior Note, the Company issued 12,000 warrants to

purchase shares of common stock at the exercise price of $52.50 per share.

During the year ended

December 31, 2022, 6 warrants were exercised using the cashless option into 4 shares of common stock.

During the year ended

December 31, 2023, in connection with the New Note financing, the Company issued 26,000 warrants to purchase shares of common stock at

the exercise price of $15.25 per share.

During the year ended

December 31, 2023, in connection with the modification of the Prior Note, the Company cancelled the original 12,000

common stock warrants and issued 24,000

new common stock warrants at an exercise price of $15.25 per share.

8 – Income Taxes

For the year ended December 31, 2023 and 2022,

the Company recorded no income tax benefit for the net operating losses incurred during the year, due to the uncertainty of realizing

a benefit from those items.

The following is a reconciliation of the statutory

1 unchanged sentence

Schedule of effective income tax rate reconciliation

December 31, 2022

Income tax expense (benefit) at federal statutory rate

( 1,448,463 )

State and local income taxes, net of federal tax benefit

federal statutory rate

State and local taxes, net of federal benefit

Prior year true-ups

Changes in valuation allowance

Total provision expense (benefit) for income taxes

Significant components of the Company’s deferred

taxes consisted of the following:

Schedule of deferred taxes

December 31, 2022

Change in valuation allowance

Effective rate

Significant components of the Company’s

deferred tax assets as of December 31, 2023 and 2022 are summarized below.

Deferred tax assets:

Stock based compensation

Federal net operation losses

State net operation losses

Stock based compensation

Total deferred tax assets

Valuation allowance

( 2,787,033 )

Total deferred tax assets, net of valuation allowance

Deferred tax liabilities:

Deferred income tax liabilities:

Capitalized software

1 unchanged sentence

Total deferred tax liabilities

Net deferred tax assets

Valuation allowance

( 4,845,921 )

Total net deferred tax asset (liability)

period ended December 31, 2022, the Company has federal and state net operating loss carryforwards of $ 11,068,185 and $ 11,068,185 , respectively.

net operating loss carryforwards do not have an expiration, however, are limited to 80% of the excess of taxable income over the total

Net Operating Loss Deduction, the state net operating loss carryforwards will conform to the federal provisions.

Additionally,

after weighting all available and positive and negative evidence for the period ended December 31, 2022, the Company has recorded a valuation

allowance of $(2,787,033).

Company continuously monitors its current and prior filing positions in order to determine if any unrecognized tax positions need to

The analysis involves considerable judgement and is based on the best information available.

For the period ended

December 31, 2022, the Company is not aware of any positions which require an uncertain tax position liability.

is subject to taxation in the United States and Colorado.

The statute of limitations on the initial tax return filed for 2021 tax year

will expire in 2025 for federal and in 2026 for state jurisdictions.

Note 11 – Net Loss Per Share

Basic net loss per share is computed by dividing net

loss, which is allocated based upon the proportionate amount of weighted average shares outstanding, to each class of stockholder’s

( 2,787,033 )

Net deferred tax asset, net of valuation allowance

For the year ended December 31, 2023, the Company

has federal and state net operating loss carryforwards of $ 19,692,052

and $ 19,692,052 ,

respectively.

The federal net operating loss carryforwards

do not have an expiration, however, are limited to 80% of the excess of taxable income over the total net operating loss deduction.

state net operating loss carryforwards will conform to the federal provisions.

After weighing all available positive and negative

evidence for the periods ended December 31, 2023 and 2022, the Company has recorded a valuation allowance of $ 4,845,921 and $ 2,787,033 ,

respectively.

The Company continuously monitors its current

and prior filing positions in order to determine if any unrecognized tax positions should be recorded.

The analysis involves considerable

judgement and is based on the best information available.

For the periods ended December 31, 2023 and 2022, the Company is not aware

of any positions which require an uncertain tax position liability.

The Company is subject to taxation in the United

States and Colorado.

The statute of limitations on the initial tax return filed for 2021 tax year will expire in 2025 for federal and

in 2026 for state jurisdictions.

9 – Net Loss Per Share

Basic net loss per share is computed by dividing

net loss, which is allocated based upon the proportionate amount of weighted average shares outstanding, to each class of stockholder’s

stock outstanding during the period.

1 unchanged sentence

for basic net loss per share is adjusted by the effect of dilutive securities, including awards under our equity compensation plans.

As of December 31, 2022, and 2021, 6,318,758 and 5,009,315 ,

Reverse Stock Split

On February 26, 2024, the Company effected

a 1-for-25 reverse stock split of its common stock.

The reverse stock split applied to the Company’s outstanding warrants, stock options and

restricted stock units.

The number of shares of common stock into which these outstanding securities are convertible or exercisable

were adjusted proportionately as a result of the reverse stock split.

The exercise prices of any outstanding warrants or stock

options were also proportionately adjusted in accordance with the terms of those securities and the Company’s equity incentive

All weighted average share amounts have been retroactively adjusted for the reverse stock split.

As of December 31, 2023, and 2022, 265,079

and 252,750 ,

respectively of potentially dilutive weighted average shares were excluded from the calculation of diluted net loss per share because

1 unchanged sentence

Note 10 – Subsequent Events

10, 2023, the Company’s board of directors appointed Timothy J.

Ackerman as the Company’s new Chief Financial Officer.

connection with Mr.

Ackerman's appointment, the compensation committee of Auddia's board of directors granted Mr.

Ackerman (i) an inducement

stock option to purchase an aggregate of 150,200 shares of Auddia common stock, and (ii) 37,500 restricted stock units for Auddia common

These stock options and RSUs were agreed to and granted as an inducement material to Mr.

Ackerman entering into employment with

Auddia in accordance with Nasdaq Listing Rule 5635(c)(4).

The RSUs and options are both subject to certain vesting requirements.

Management evaluated

subsequent events and transactions that occurred after the balance sheet date, up to the date that the financial statements were issued.

Based upon this review, other than as set forth below, management did not identify any subsequent events that would have required adjustment

or disclosure in the financial statements.

RFM Acquisition

On January 26, 2024, we entered into a Purchase

Agreement (the “RFM Purchase Agreement”), pursuant to which we agreed to acquire RadioFM (the “RFM Acquisition”),

which is currently a component of both AppSmartz and RadioFM (partnerships under common control).

The aggregate consideration for the

RFM Acquisition is $13,000,000 (plus $2,000,000 in contingent consideration if certain post-close milestones are reached), in addition

to the assumption of certain liabilities, as may be adjusted pursuant to the terms of the RFM Purchase Agreement.

In March 2024, the parties mutually agreed to

terminate the RFM Purchase Agreement.

The Company filed an amendment to its Certificate

of Incorporation with the Secretary of State in Delaware which became effective as of 5:00 P.M.

Eastern Time on February 26, 2024.

a result, every twenty-five (25) issued shares of common stock were automatically combined into one share of common stock.

Shares of the Company’s common stock were

assigned a new CUSIP number (05072K 206) and began trading on a split-adjusted basis on February 27, 2024.

The reverse stock split did not change the authorized

number of shares of the Company’s common stock.

No fractional shares were issued and any fractional shares resulting from the reverse

stock split were rounded up to the nearest whole share.

Therefore, stockholders with less than 25 shares received one share of stock.

The reverse stock split applied to the Company’s

outstanding warrants, stock options and restricted stock units.

The number of shares of common stock into which these outstanding securities

are convertible or exercisable were adjusted proportionately as a result of the reverse stock split.

The exercise prices of any outstanding

warrants or stock options were also proportionately adjusted in accordance with the terms of those securities and the Company’s

equity incentive plans.

From February 15, 2024 through March 19, 2024,

the Company has sold 1,340,000 shares to White Lion for total proceeds of $3,606,508.

The Company currently has an effective registration

statement that registers for resale by White Lion up to 765,263 shares of common stock that may be issued to White Lion under the Equity

Line Purchase Agreement.

After White Lion has acquired shares under the Equity Line Purchase Agreement, it may sell all, some or none

of those shares.

Sales to White Lion by us pursuant to the Equity Line Purchase Agreement may result in substantial dilution to the interests

of other holders of the Company’s common stock.

Nasdaq Compliance

On March 20, 2024, the Company received a letter

from Nasdaq stating it had regained compliance with the minimum bid requirement.

The Panel reminded the Company that although it regained

compliance with the minimum bid requirement, it is also required to regain compliance with the equity requirement.

Therefore, this matter

will remain open until the Company demonstrates compliance with all requirements.

Operating Lease

On March 25, 2024, the Company entered into a

new 37-month operating lease commencing on April 1, 2024 with two separate two year renewal options.

The monthly base rent for months

two through 14 is $2,456, increasing to $3,070 for months 15 through 26, and ending at $3,684 for months 27 through 37.

Changes and Disagreements with Accountants on Accounting and Financial Disclosure

8, 2023, we were advised by Daszkal Bolton, LLP (“Daszkal”), the Company’s independent registered public accounting

firm, that Daszkal completed a business combination agreement with CohnReznick LLP (“CohnReznick”).

As a result of this transaction,

Daszkal will resign as the Company’s independent registered public accounting firm following the filing of this Annual Report.

Company’s current Daszkal audit team is now part of CohnReznick and the Company expects it will likely engage CohnReznick to serve

as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2023 but

has not engaged them at this time.

Daszkal’s reports on the Company’ financial statements for the past two years did not contain an adverse opinion or a disclaimer

of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the years ended December 31, 2022 and 2021, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K

and the related instructions) between the Company and Daszkal on any matter of accounting principles or practices, financial statement

disclosure, or auditing scope or procedure, which, if not resolved to Daszkal’s satisfaction, would have caused Daszkal to make

reference thereto in its reports on the financial statements for such years;

and (ii) no “reportable events” within the meaning

of Item 304(a)(1)(v) of Regulation S-K, except that Daszkal advised the Company of material weaknesses in its internal control over financial

reporting as of December 31, 2021 and 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data