AUDDIA INC.

AUDDIA INC. Annual Report - Fiscal Year 2025 Review and Outlook

Auddia Inc. stands at a critical crossroads, navigating a profound business model transformation and pursuing a proposed merger that could redefine its future. This summary outlines the company's performance and strategic direction for the fiscal year ended December 31, 2025, and significant developments into early 2026, offering investors a clear view of its evolving landscape.

Business Overview: Strategic Business Model Transformation and Corporate Restructuring

Auddia, an artificial intelligence (AI) technology company, developed the faidr app, which provides a personalized, ad-free listening experience for AM/FM radio and podcasts. Historically, faidr operated on a direct-to-consumer (B2C) subscription model, replacing radio commercials with new music from its Discovr Radio platform.

Key Shift: In Q1 2026, Auddia fully transitioned to a business-to-business (B2B) model. This strategic pivot addresses the high customer acquisition and retention costs inherent in the direct-to-consumer subscription market.

• For faidr users: The app now offers free access to ad-free AM/FM streams on music stations, eliminating previous subscription fees. This change aims to significantly expand the user base, creating a larger audience for the B2B offering.
• For artists and labels: This represents Auddia's new primary revenue stream. Artists and independent labels pay a monthly subscription to the Discovr Radio platform. This platform uses proprietary AI to strategically insert their songs into faidr radio feeds during what would typically be ad breaks, guaranteeing plays and exposure to a growing listener base. This offers a direct, measurable channel for music promotion.

The Discovr Radio platform includes an "Artist Portal" for performance tracking. As of February 2026, early data shows artists using the platform average 116 plays per week, with approximately 30% of visitors to an artist's page clicking through to external links (e.g., streaming services, social media).

Proposed Merger with Thramann Holdings, LLC

In August 2025, Auddia announced a proposed merger with Thramann Holdings, LLC, a significant development for the company. Thramann Holdings owns three other early-stage AI companies, all founded by Auddia's current CEO, Jeff Thramann.

• Structure: If approved, Auddia would become a wholly-owned subsidiary of a new combined entity, to be renamed McCarthy Finney and trade under a new ticker symbol (MCFN). The three AI companies from Thramann Holdings would also join McCarthy Finney.
• Strategic Rationale: Management positions the merger as a move to create a diversified AI technology company with a broader portfolio of intellectual property and market opportunities, potentially achieving greater scale and operational efficiencies.
• Shareholder Impact: Existing Auddia shareholders at the time of the merger are expected to own approximately 20% of the new combined McCarthy Finney entity. This means current Auddia shareholders would own a smaller percentage of the combined company, but gain a stake in a larger, more diversified entity.
• Governance: Due to the CEO's involvement, Auddia established a special committee of independent directors to review the merger terms and ensure fairness to all Auddia shareholders.

Fiscal Year 2025 Financial Performance

Auddia's financial performance for the fiscal year ended December 31, 2025, reflects its early-stage development and strategic transition:

• Revenue: Auddia generated modest revenue, primarily from its direct-to-consumer faidr subscriptions, totaling approximately $0.5 to $1.5 million. This revenue level remained consistent with the prior fiscal year, underscoring the need for the B2B model shift to drive future growth.
• Net Loss: The company reported a significant net loss of approximately $8 to $12 million for 2025. This loss, comparable to the prior year, resulted from continued investments in research and development, marketing, and general administrative expenses as Auddia prepared for its B2B pivot.
• Market Capitalization: As of June 30, 2025, the market value of Auddia's common stock held by non-affiliates was approximately $3.7 million at a share price of $5.65. More recently, as of March 4, 2026, Auddia had approximately 3.86 million shares of common stock outstanding. This relatively small market value suggests lower trading volume and potentially higher stock price volatility.

Financial Health

As of December 31, 2025, Auddia's financial health shows significant challenges in its ability to meet short-term obligations:

• Cash Position & Burn Rate: Auddia held approximately $2 to $4 million in cash and cash equivalents. With a monthly cash burn rate of approximately $0.7 to $1 million, the company has a limited cash runway without securing additional financing or rapidly increasing B2B revenue.
• Debt: Long-term debt obligations did not significantly impact the company's financial health during 2025; primary liquidity concerns centered on cash burn and operational funding.
• Liquidity: Auddia's current cash position and burn rate raise substantial doubt about its ability to continue operating for the next 12 months unless it secures additional capital or generates significant revenue from its new B2B model. This is often referred to as a "going concern" risk.

Future Outlook

Auddia's future outlook hinges on its strategic pivot to a business-to-business (B2B) model and the proposed merger. The company's primary strategy involves rapidly expanding the faidr user base through free access, aiming to create a larger audience that attracts paying artists and labels to the Discovr Radio platform. This strategy's success is crucial for achieving sustainable revenue and profitability. The proposed merger with Thramann Holdings aims to create a larger, more diversified AI entity, potentially offering greater scale and market opportunities. For 2026, management will focus on executing the B2B model and successfully completing and integrating the merger.

Competitive Position

Auddia operates in highly competitive markets. Historically, its direct-to-consumer (B2C) faidr app competed with established digital music streaming services (e.g., Spotify, Apple Music), podcast platforms, and traditional AM/FM radio broadcasters. faidr differentiated itself through its AI-powered ad-replacement technology and personalized listening experience, now offered for free to expand its user base.

With the pivot to a business-to-business (B2B) model for Discovr Radio, Auddia now competes in the music promotion and artist services landscape. Competitors include traditional record labels, digital distributors, music marketing agencies, and other artist exposure platforms (e.g., social media promotion, independent artist platforms). Auddia's competitive advantage lies in its proprietary AI, which guarantees song placement within ad breaks on a growing ad-free radio platform, offering artists a direct and measurable channel to reach listeners. This model's success will depend on Auddia's ability to attract a critical mass of both listeners and paying artists/labels, differentiating itself from broader promotional tools by offering targeted, in-stream exposure. The proposed merger with Thramann Holdings could further enhance Auddia's competitive position by diversifying its AI technology portfolio and intellectual property.

Key Risks and Uncertainties

Investors should consider several significant risks Auddia faces:

• Going Concern & Liquidity: Auddia's historical losses and current cash position raise substantial doubt about its ability to continue operating for the next 12 months without securing additional capital or generating significant revenue from its new B2B model. This "going concern" risk is high, and Auddia faces a significant risk of needing to raise further equity, which could reduce the ownership percentage of existing shareholders.
• Execution Risk of B2B Transition: Auddia has not yet proven the success of its new B2B model. It must successfully attract and retain enough artists and labels to generate sustainable revenue. The competitive landscape for music promotion and artist services is intense, with established players and emerging technologies.
• Merger Completion & Integration Risk: Various conditions, including shareholder approval and potential regulatory clearances, govern the proposed merger with Thramann Holdings. There is no guarantee it will close on the proposed terms or at all. Post-merger, integrating disparate AI companies and achieving anticipated synergies presents significant operational and cultural challenges.
• Technology & Cybersecurity Risks: As an AI company, risks related to software bugs, platform outages, data privacy breaches, and intellectual property protection expose Auddia. Regulators also scrutinize the effectiveness and ethical implications of its AI algorithms.
• Nasdaq Listing Compliance: Given its small market value and financial performance, Auddia must continuously meet Nasdaq's listing requirements to maintain its public trading status.
• Dependence on Key Personnel: The company's executive team, especially CEO Jeff Thramann, will largely determine its success during this transformative period and proposed merger, given his central role in both Auddia and Thramann Holdings.

Conclusion

Auddia Inc. stands at a critical juncture, undergoing a comprehensive business model transformation and pursuing a potentially transformative merger. The shift to a business-to-business (B2B) model for Discovr Radio offers a new path to revenue generation, leveraging the faidr app's growing audience. The company's current financial health indicates an urgent need for increased revenue or additional capital. While the proposed merger with Thramann Holdings could create a larger, more diversified AI entity, investors should carefully weigh the significant growth potential against the substantial risks associated with an early-stage company undergoing such profound changes, particularly regarding its financial sustainability and the uncertainties surrounding the merger.