UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
April 15, 2024 (
(Exact name of registrant as specified in its charter)
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(Commission File Number) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
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area code:
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
Background
As previously disclosed, in November 2022 and April 2023, Auddia Inc. (the “Company”, “we” and “us”) entered into secured bridge note (“Bridge Notes”) financings with one accredited investor who is a significant existing stockholder of the Company. The Company received $2.75 million of gross proceeds in connection with the Bridge Note financings. The Bridge Notes are currently due.
In connection with the issuance of the Bridge Notes, the Holder also holds 50,000 common stock warrants (1,250,000 warrants prior to adjustment for the recent 1-25 reverse stock split) (“Existing Warrants”) with a current exercise price of $15.25 per share ($0.61 per share prior to adjustment for the recent 1-25 reverse stock split).
Amendment and Waiver Agreement Relating to Prior Secured Bridge Note Financings
On April 9, 2024, the Company and the investor entered into an Amendment and Waiver Agreement relating to the Bridge Notes.
Principal Repayment
The Company has agreed to pay $2.75 million in cash to the Investor in repayment of the principal of the Bridge Notes (exclusive of the $275,000 of original issue discount on the Bridge Notes) shortly after the closing by the Company of one or more equity financings with total gross proceeds to the Company of not less than $6,000,000.
Equity Conversion
Effective April 9, 2024, the Investor converted $911,384 (the “Rollover Amount”) which is equal to the (i) unpaid accrued interest on the Bridge Notes plus (ii) the original issue discount (“OID”) on the Bridge Notes, into equity securities of the Company (the “Rollover Securities”).
The Rollover Securities consist of (i) 463,337 prefunded common stock warrants with a per share exercise price of $0.001 per share (the “Prefunded Warrants”) and (ii) 463,337 non-prefunded warrants (the “Non-Prefunded Warrants”) with a per share exercise price equal to $1.967. As of the date and time of the Amendment and Waiver Agreement, the Nasdaq Minimum Price (as defined in the applicable Nasdaq listing rules) for the Company’s common stock was $1.966.
The number of Prefunded Warrants was determined by dividing the Rollover Amount by $1.967. The number of Non-Prefunded Warrants is equal to the number of Prefunded Warrants (i.e. 100% warrant coverage). The Non-Prefunded Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. In order to assure compliance with applicable Nasdaq rules, the Non-Prefunded Warrants shall not be exercisable for six months following the date of issue.
Fee Warrants
The Company issued to the Investor 50,000 new common stock warrants with a five year term as a loan extension fee (“Fee Warrants”). The exercise price of these additional Fee Warrants is $1.967. The Fee Warrants have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. In order to assure compliance with applicable Nasdaq rules, the Fee Warrants shall not be exercisable for six months following the date of issue.
Repricing of Existing Warrants
The Company agreed to adjust the exercise price of the Investor’s Existing Warrants from $15.25 (after adjustment for the recent reverse stock) to $1.967 per share.
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Ownership and Exercise Limitations
The Investor will not be able to receive shares upon exercise of any of the foregoing securities, unless prior stockholder approval is obtained, if (i) the number of shares to be issued would exceed 20% of the Company’s outstanding number of shares at a discount to the applicable Nasdaq Minimum Price or (ii) the number of shares to be issued would result in in a Change of Control within the meaning of Nasdaq Rule 5635(b).
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The foregoing description of the Amendment and Waiver Agreement is qualified in its entirety by reference to the full text of that Agreement, a copy of which is filed as Exhibits 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit Number |
Description | |
| 10.1 | Amendment and Waiver Relating to Senior Secured Bridge Notes dated April 9, 2024 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AUDDIA INC. | ||
April 15, 2024 |
By: | /s/ John Mahoney |
| Name: John Mahoney | ||
| Title: Chief Financial Officer | ||
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Exhibit 10.1
AMENDMENT AND WAIVER RELATING TO
SENIOR SECURED BRIDGE NOTES
This Amendment and Waiver (this “Waiver”), dated as of April 9, 2024, is entered into by and among Auddia Inc., a Delaware corporation (the “Company”), and the undersigned investor (the “Holder”). Unless otherwise specified herein, capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Notes (as defined below).
RECITALS
A. The Holder holds $3,025,000 aggregate outstanding principal amount (inclusive of $275,000 of original issue discount) of the Company’s outstanding senior secured bridge notes (“Notes”).
B. In connection with the issuance of the Notes, the Holder also holds 50,000 common stock warrants (1,250,000 warrants prior to adjustment for the recent 1-25 reverse stock split) (“Existing Warrants”) with a current exercise price of $15.25 per share ($0.61 per share prior to adjustment for the recent 1-25 reverse stock split).
C. The parties desire to retire the Notes as provided in this Agreement.
D. During April 2024, the Company expects to complete equity financings with total gross proceeds to the Company of not less than $6,000,000 (the “2024 Qualified Financing”).
TERMS OF AGREEMENT
In consideration of the premises and further valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Partial Payoff of Notes. No later than one business day following the closing of the 2024 Qualified Financing, the Company will pay $2,750,000 in cash to Holder in repayment of the principal of the Notes (exclusive of the $275,000 of original issue discount on the Notes).
2. Equity Rollover.
(a) As of the date of this Agreement, the Holder hereby converts, rollsover and exchanges into equity securities of the Company as described below (the “Rollover Securities”) the amount equal to the (i) unpaid accrued interest on the Notes and (ii) any original issue discount (“OID”) on the Notes (the “Rollover Amount”).
(b) The Rollover Securities shall consist of (i) prefunded common stock warrants with a per share exercise price of $0.001 per share (the “Prefunded Warrants”) and (ii) non-prefunded warrants (the “Non-Prefunded Warrants”) with a per share exercise price equal to $1.967. As of the date and time of this Agreement, the Nasdaq Minimum Price (as defined in the applicable Nasdaq listing rules) for the Company’s common stock is $1.966.
(c) The number of Prefunded Warrants shall be determined by dividing the Rollover Amount by $1.967. The number of Non-Prefunded Warrants shall be equal to the number of Prefunded Warrants (i.e. 100% warrant coverage). The Non-Prefunded Warrants shall have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. In order to assure compliance with applicable Nasdaq rules, the Non-Prefunded Warrants shall not be exercisable for six months following the date of issue.
(d) Such exchange, conversion, or rollover is conditioned upon such exchange, conversion, or rollover being in full compliance with all applicable listing rules of the Nasdaq Stock Market (including stockholder approval requirements).
3. Repricing of Existing Warrants.
(a) As of the date of this Agreement, the parties agree that they will adjust the Existing Warrants (by means of an amendment or exchange of the Existing Warrants as appropriate) so that the current exercise price of the Existing Warrants ($15.25 after adjustment for the recent reverse stock) will be adjusted to an amount equal $1.967.
(b) Such adjustment to the Existing Warrants related to the 2024 Qualified Financing shall be conditioned upon such adjustment being in full compliance (without the need for a stockholder vote) with all applicable listing rules of the Nasdaq Stock Market.
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4. Issuance of Extension Fee Warrants.
(a) The Company hereby agrees to the Investor 50,000 new common stock warrants with a five year term as a loan extension fee (“Fee Warrants”). The exercise price of these additional Fee Warrants shall be $1.967. The Fee Warrants shall have a price adjustment provision which will adjust the exercise price downward in the event that the Company issues equity securities in the future at an effective per share price below the then current exercise price. In order to assure compliance with applicable Nasdaq rules, the Fee Warrants shall not be exercisable for six months following the date of issue.
(b) Any such issuance of the Fee Warrants shall be conditioned upon such issuance being in full compliance (without the need for a stockholder vote) with all applicable listing rules of the Nasdaq Stock Market.
5. Retirement of Notes; Waiver of All Defaults. Following the completion of the transactions described in Sections 1 and 2 above, the parties agree that (i) the Notes should be fully paid and retired, and (ii) the Holder hereby waives any and all events of default (past or present) under the Notes.
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This Amendment and Waiver may be executed and delivered in one or more counterparts. The parties have executed this Amendment and Waiver as of the date first noted above.
| COMPANY: | |||
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Auddia Inc. | ||
| By: | /s/ Jeff Thramann | ||
| Name: | Jeff Thramann | ||
| Title: | Executive Chairman | ||
| HOLDER: | |||
| Name of Holder: | Richard M. Minicozzi | ||
| Signature: | /s/ Richard M. Minicozzi | ||
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