Material Agreement - Form 8-K

Item 1.01

Entry into a Material Definitive Agreement.

$2.3 Million Convertible Preferred Stock and Warrants Financing

On April 23, 2024, Auddia Inc. (the "Company", "we" and "us") entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing. The Company has received $2,314,000 of gross proceeds in connection with the closing of this financing.

At the closing, the Company issued 2,314 shares of Series B convertible preferred stock ("Series B Preferred Stock") at a purchase price of $1,000 per share of Series B Preferred Stock. The Series B Preferred Stock is convertible into Common Stock at an initial conversion price ("Conversion Price") of $1.851 per share of Common Stock. The Company also issued warrants ("Warrants") exercisable for 1,198,345 shares of Common Stock with a five year term and an initial exercise price of $1.851 per share.

The proceeds of this financing, together with other available cash resources, will be used to repay outstanding debt and for general corporate purposes.

The Company believes that the closing of this financing, together with other recent financing activities, will bring the Company back into compliance with the Nasdaq stockholders' equity requirement for continued listing on the Nasdaq Capital Market.

The securities purchase agreement contains customary representations and warranties and agreements and obligations of the parties.

Terms of the Series B Preferred Stock

The Company has filed a Certificate of Designations of Preferences, Rights and Limitations of Series B Preferred Stock ("Certificate of Designations") with the Secretary of State of the State of Delaware.

Rank

The Certificate of Designations provides that the Series B Preferred Stock ranks senior to the Common Stock with respect to dividends and right upon liquidation.

Voting Rights

Except as otherwise required by law (or with respect to approval of certain actions), the Series B Preferred Stock will not have voting rights.

Dividends

Holders of the Series B Preferred Stock will be entitled to dividends in the amount of 10% per annum, payable quarterly.

The Company has the option to pay dividends on the Series B Preferred Stock in additional shares of Common Stock. If the Company elects to pay in the form of Common Stock, the number of dividend shares to be issued shall be calculated by using a "Dividend Conversion Price" equal to the lower of (i) the then applicable Series B Conversion Price as in effect on the applicable dividend date, or (ii) 90% of the lowest VWAP of the Common Stock during the five (5) consecutive trading day period ending and including the trading day immediately preceding the applicable dividend date.

The Company also has the option to cumulate or "capitalize" the dividends, in which case the accrued dividend amount shall be added to the stated value of each share of Series B Preferred Stock.

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