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    AEYE   US0507342014

AUDIOEYE, INC.

(AEYE)
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AUDIOEYE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

03/11/2021 | 05:23pm EDT
The following discussion should be read in conjunction with our audited
financial statements and the related notes for the years ended December 31, 2020
and 2019 that appear elsewhere in this annual report on Form 10-K. The following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs. Our actual results could differ materially from those discussed in
the forward-looking statements. Factors that could cause or contribute to such
differences include but are not limited to those discussed below and elsewhere
in this annual report on Form 10-K, particularly in "Risk Factors." The
forward-looking statements included in this annual report on Form 10-K are made
only as of the date hereof.



Background



AudioEye, Inc. was formed as a Delaware corporation on May 20, 2005. On
August 1, 2018, the Company amended its Certificate of Incorporation to
implement a reverse stock split in the ratio of 1 share for every 25 shares of
common stock and to reduce the number of authorized shares of common stock from
250,000,000 to 50,000,000. As a result, 186,994,384 shares of the Company's
common stock were exchanged for 7,479,775 shares of the Company's common stock.



                                      18





Overview



AudioEye is an industry-leading software solution provider delivering website
accessibility compliance at all price points to businesses of all sizes. Our
solutions advance accessibility with patented technology that reduces barriers,
expands access for individuals with disabilities, and enhances the user
experience for a broader audience. We believe that, when implemented, our
solution offers businesses and organizations the opportunity to reach more
customers, improve brand image, build additional brand loyalty, and, most
importantly, provide an accessible and usable web experience to the expansive
and ever-growing global population of individuals with disabilities.



AudioEye primarily generates revenue through the sale of subscriptions for our
software-as-a-service ("SaaS") accessibility solutions. Our solutions are backed
by AudioEye's machine-learning/AI-driven technology that finds and fixes the
most common accessibility errors. Our core and supplemental solutions are
designed to help websites and applications achieve and sustain substantial
conformance with the Web Content Accessibility Guidelines ("WCAG") which are web
accessibility standards published by the Web Accessibility Initiative of the
World Wide Web Consortium, the main international standards organization for the
internet. Our solutions help mitigate a customer's risk of costly digital
accessibility-related legal action and improve their negotiation leverage when
defending against claims of non-compliance. AudioEye customers may purchase
solutions directly through the AudioEye website, through a platform or an agency
partner, such as Duda, that integrates our solutions into their marketplace,
through a vertical Content Management System ("CMS") partner or through an
authorized reseller, or by working directly with the AudioEye sales team. We
also provide PDF remediation and Mobile App report services. Our offerings serve
businesses and organizations of all sizes and at all price points.



AudioEye stands out among its competitors because it delivers
machine-learning/artificial intelligence ("AI")-driven accessibility without
fundamental changes to the website architecture. As another differentiator, we
offer greater transparency. Our offerings provide automated remediations and a
transparent compliance score with additional manually driven enhancements.
AudioEye pairs its patented technology solutions with certified accessibility
experts, which allows our customers to achieve a higher level of compliance than
competitors relying solely on the reach of automation. Our technology publishes
more than one billion remediations daily, and our solution is trusted by some of
the largest and most influential companies in the world, including ADP, Tommy
Hilfiger, 360 Media, Samsung, Darden, Landry's and more. Government agencies,
from the federal level down to the local level, have also integrated our
software in their digital platforms, including the Federal Communications
Commission and the Social Security Administration.



We manage customers through two primary channels, Enterprise and Partner and
Marketplace. Enterprise channel consists of our larger customers and
organizations, including those with non-platform custom websites, who generally
engage directly with AudioEye sales personnel for custom pricing and solutions.
This channel also includes federal, state and local government agencies. The
Partner and Marketplace channel consists of our CMS partners, platform & agency
partners, authorized resellers and the Marketplace. This channel serves small
and medium sized businesses that are on a partner or reseller's web-hosting
platform or that purchase an AudioEye solution from our Marketplace. We saw
strong growth in both our Enterprise and Partner and Marketplace channels in
2020, with revenue growth in each channel of 48% and 177%, respectively, in 2020
compared to 2019. Our Partner and Marketplace revenue growth was due to a
significant number of additional customer implementations that each Partner
offers, and represented about 57% of Monthly Recurring Revenue ("MRR")
contribution at the end of 2020. We define MRR as the sum of (i) for our
Enterprise channel, the total of the average monthly recurring fee amount under
each active paid contract at the date of determination, plus (ii) for our
Partner and Marketplace channel, the recognized recurring monthly fee amount for
all paying customers at the date of determination, in each case, assuming no
changes to the subscription and without taking into account any usage above the
subscription or recurring revenue base, if any, that may be applicable to such
subscription. This determination includes both annual and monthly contracts for
recurring products. Some of our contracts are cancelable, which may impact
future MRR. MRR excludes revenue from our PDF remediation services and Mobile
App report business. As of December 31, 2020, MRR was approximately $1.9
million, which represented an increase of 54% year-over-year.



                                      19





Results of Operations



Our financial statements are stated in United States Dollars and are prepared in
accordance with United States Generally Accepted Accounting Principles ("U.S.
GAAP" or "GAAP"). The discussion of the results of our operations compares the
year ended December 31, 2020 with the year ended December 31, 2019. Our results
of operations in these periods are not necessarily indicative of the results
which may be expected for any subsequent period. Due to rounding, numbers
presented throughout this document may not add up precisely to the totals
provided and percentages may not precisely reflect the absolute figures.



In 2020, the Company amended the categorization of certain expenses to conform
to changes incurred in its operations, including internal department structure
changes, employee movements, intellectual property and technology related
expenses, and facility expenses. For the purposes of comparability, the company
reclassified prior period results to conform with our current period
presentation.



                                                   Year ended                Favorable / (Unfavorable)
                                                  December 31,                         Change
(in thousands)                                 2020           2019              $                   %
Revenue                                     $   20,475     $   10,765     $        9,710                90 %
Cost of revenue                                  5,961          4,406              1,555                35 %
Gross profit                                    14,514          6,359              8,155               128 %
Operating expenses:
Selling and marketing                            8,472          5,708             (2,764 )             (48 )%
Research and development                         1,230            636               (594 )             (93 )%
General and administrative                      11,945          7,833      
      (4,112 )             (52 )%
Total operating expenses                        21,647         14,177             (7,470 )             (53 )%
Operating loss                                  (7,133 )       (7,818 )              685                 9 %
Other income (expense):
Change in fair value of warrant liability          120             99      
          21                21 %
Interest expense                                  (145 )          (76 )              (69 )             (91 )%
Other income (expense)                               -             12                (12 )            (100 )%
Total other income (expense)                       (25 )           35      
         (60 )            (171 )%
Net loss                                    $   (7,158 )   $   (7,783 )   $          625                 8 %




                                      20





Revenue


The following table presents our revenues disaggregated by sales channel:




                                            Year ended December 31,           Favorable / (Unfavorable) Change
(in thousands)                               2020              2019                  $                      %
Enterprise                               $     10,735       $     7,252     $             3,483                48 %
Partner and Marketplace                         9,740             3,513                   6,227               177 %
Total revenues                           $     20,475       $    10,765     $             9,710                90 %




Enterprise channel consists of our larger customers and organizations, including
those with non-platform custom websites, who generally engage directly with
AudioEye sales personnel for custom pricing and solutions. This channel also
includes federal, state and local government agencies.



Partner and Marketplace channel consists of our CMS partners, platform & agency
partners, authorized resellers and the Marketplace. This channel serves small &
medium sized businesses that are on a partner or reseller's web-hosting platform
or that purchase an AudioEye solution from our Marketplace.



For the year ended December 31, 2020, total revenue increased by 90%, over the
prior year. We experienced revenue growth in both of our sales channels. The
increase in Enterprise channel revenue was driven by growth in our managed
solutions and the benefit from increased contribution by our PDF remediation
services and Mobile App report business. The increase in Partner and Marketplace
channel revenue was a result of our continued focus on highly transactional
industry verticals to achieve higher penetration within our existing
partnerships.



Cost of Revenue and Gross Profit




                   Year ended December 31,          Favorable / (Unfavorable) Change
(in thousands)       2020             2019                 $                      %
Revenue          $     20,475       $  10,765     $              9,710               90 %
Cost of sales           5,961           4,406                   (1,555 )            (35 )%
Gross profit     $     14,514       $   6,359     $              8,155              128 %




Cost of revenue consists primarily of compensation and related benefits costs
for our customer experience team, as well as a portion of our technology
operations team that supports the delivery of our services, fees paid to our
managed hosting and other third-party service providers, amortization of
capitalized software development costs and patent costs, and allocated overhead
costs.



For the year ended December 31, 2020, cost of sales increased by 35% over the
prior year. The increase in cost of sales was primarily due to additions to our
employee and contractor headcount to support the increase in revenue and
delivery of our services, as well as an increase in amortization of capitalized
software development costs.



For the year ended December 31, 2020, gross profit increased by 128% over the
prior year. The increase in gross profit was a result of increased revenue and
continued improvement in technology driven efficiencies as we scale, offset in
part by higher costs to support the revenue growth.



Selling and Marketing Expenses




                                            Year ended December 31,             Favorable / (Unfavorable) Change
(in thousands)                              2020               2019                  $                       %
Selling and marketing                   $      8,472       $      5,708     $            (2,764 )                (48 )%




Selling and marketing expenses consist primarily of compensation and benefits
related to our sales and marketing staff, as well as third-party advertising and
marketing expenses.



For the year ended December 31, 2020, selling and marketing expenses increased
by 48% over the prior year. The increase in selling and marketing expenses
resulted primarily from an increase in personnel costs driven by focused talent
acquisition, higher commission costs, higher digital and third-party marketing
agency expenses, and higher media spend as we continued to expand our business.



                                      21





Research and Development



                                            Year ended December 31,             Favorable / (Unfavorable) Change
(in thousands)                              2020               2019                 $                        %

Research and development expense $ 1,230 $ 636 $

             (594 )                  (93 )%
Plus: Capitalized research and
development cost                                1,157               307                   (850 )                 (277 )%
Total research and development cost     $       2,387               943    
$           (1,444 )                 (153 )%



Research and development ("R&D") expenses consist primarily of compensation and
related benefits, independent contractor costs, and an allocated portion of
general overhead costs, including occupancy costs related to our employees
involved in research and development activities. Total research and development
cost includes the amount of research and development expense reported within
operating expenses as well as development cost that was capitalized during
the
fiscal period.



For the year ended December 31, 2020, research and development
expenses increased by 93% over the prior year. This was driven by increased
investment in Machine Learning and non-capitalizable R&D efforts related to our
new product and platform development as we test and learn new capabilities. For
the year ended December 31, 2020, capitalized research and development cost
increased 277% over the prior year, driven by increased investment in our
platforms and products as we continue to improve our technology and product
delivery to help our customers and gain efficiencies as we scale. Total research
and development cost, which includes both R&D expenses and capitalized R&D
costs, increased 153% from 2019 to 2020.



General and Administrative Expenses




                                            Year ended December 31,             Favorable / (Unfavorable)Change
(in thousands)                              2020               2019                  $                       %
General and administrative              $      11,945       $     7,833     $            (4,112 )                (52 )%



General and administrative expenses consist primarily of compensation and benefits related to our executives, corporate support functions and administrative staff, general corporate expenses including legal fees, and occupancy costs.




For the year ended December 31, 2020, general and administrative expenses
increased by 52% over the prior year. The increase in general and administrative
expenses was due primarily to higher compensation costs, including stock-based
compensation expense, driven by increased executive headcount to support the
Company's growth, systems infrastructure improvement and legal expenses towards
corporate governance, litigation and intellectual property defense. In addition,
in the third quarter of 2020, we incurred $360,000 in severance expense
associated with our strategic decision to move our technology center from
Atlanta, Georgia, to Portland, Oregon.



Change in Fair Value of Warrant Liability



                                                     Year ended
                                                    December 31,                Favorable / (Unfavorable)Change
(in thousands)                                 2020             2019               $                       %
Change in fair value of warrant liability   $       120      $        99   
 $          21                      21 %




Change in fair value of warrant liability consists of fair value adjustments
associated with warrants to purchase 146,667 shares of the Company's common
stock, which were issued in consideration for the credit facility extended by
Sero Capital in the third quarter of 2019. In the third quarter of 2020, the
warrants were fully exercised and the related liability was extinguished, which
led to a $120,000 gain being recognized for the year ended December 31, 2020.



Interest Expense



                       Year ended
                      December 31,            Favorable / (Unfavorable) Change
(in thousands)      2020        2019             $                         %
Interest expense   $   145      $  76     $           (69 )                     (91 )%



Interest expense consists primarily of amortization of debt issuance costs from
our line of credit, and interest on our PPP Loan and finance lease liabilities.
The increase in interest expense for the year ended December 31, 2020 was
attributable to the amortization of deferred issuance costs associated with our
line of credit, which was not drawn upon through its one-year term which expired
in August 2020.



                                      22





Other Key Operating Metrics


We consider monthly recurring revenue ("MRR") as a key operating metric and a
key indicator of our overall business. We also use MRR as (i) one of the primary
methods for planning and forecasting overall expectations and for evaluating, on
at least a quarterly and annual basis, actual results against such expectations;
and (ii) as a performance metric for certain executive stock-based compensation
awards.



We define MRR as the sum of (i) for our Enterprise channel, the total of the
average monthly recurring fee amount under each active paid contract at the date
of determination, plus (ii) for our Partner and Marketplace channel, the
recognized monthly fee amount for all paying customers at the date of
determination, in each case, assuming no changes to the subscription and without
taking into account any usage above the subscription or recurring revenue base,
if any, that may be applicable to such subscription. This determination includes
both annual and monthly contracts for recurring products. Some of our contracts
are cancelable, which may impact future MRR. MRR excludes revenue from our PDF
remediation services business and Mobile App report business. As of December 31,
2020, MRR was about $1.9 million, which represents an increase of 54%
year-over-year driven primarily by our Partner and Marketplace channel.



Use of Non-GAAP Financial Measures

From time to time, we review adjusted financial measures that assist us in
comparing our operating performance consistently over time, as such measures
remove the impact of certain items, as applicable, such as our capital structure
(primarily interest charges), items outside the control of the management team
(taxes), and expenses that do not relate to our core operations, including
transaction-related expenses and other costs that are expected to be
non-recurring, such as severance related to strategic shift. In order to provide
investors with greater insight, and allow for a more comprehensive understanding
of the information used in our financial and operational decision-making, the
Company has supplemented the Financial Statements presented on a GAAP basis in
this Annual Report on Form 10-K with the following non-GAAP financial measures:
Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share.



These non-GAAP financial measures have limitations as analytical tools and
should not be considered in isolation or as a substitute for analysis of Company
results as reported under GAAP. The Company compensates for such limitations by
relying primarily on our GAAP results and using non-GAAP financial measures only
as supplemental data. We also provide a reconciliation of non-GAAP to GAAP
measures used. Investors are encouraged to carefully review this reconciliation.
In addition, because these non-GAAP measures are not measures of financial
performance under GAAP and are susceptible to varying calculations, these
measures, as defined by us, may differ from and may not be comparable to
similarly titled measures used by other companies.



Non-GAAP Earnings (Loss) and Non-GAAP Earnings (Loss) per Diluted Share

We define: (i) Non-GAAP earnings (loss) as net income (loss), less non-cash
valuation adjustments to liabilities, plus interest expense, plus stock-based
compensation expense and plus certain severance expense; and (ii) Non-GAAP
earnings (loss) per diluted share as net income (loss) per diluted common share,
less non-cash valuation adjustments to liabilities, plus interest expense, plus
stock-based compensation expense and plus certain severance expense, each on a
per share basis. Non-GAAP earnings per diluted share would include incremental
shares in the share count that are considered anti-dilutive in a GAAP net loss
position. However, no incremental shares apply when there is a Non-GAAP loss per
diluted share, as is the case for the periods presented in this Annual Report on
Form 10-K.


Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per diluted share are used
to facilitate a comparison of our operating performance on a consistent basis
from period to period and provide for a more complete understanding of factors
and trends affecting our business than GAAP measures alone. All of the items
adjusted in the Non-GAAP earnings (loss) to net loss and the related per share
calculations are either recurring non-cash items, or items that management does
not consider in assessing our on-going operating performance. In the case of the
non-cash items, such as stock-based compensation expense and valuation
adjustments to assets and liabilities, management believes that investors may
find it useful to assess our comparative operating performance because the
measures without such items are expected to be less susceptible to variances in
actual performance resulting from expenses that do not relate to our core
operations and are more reflective of other factors that affect operating
performance. In the case of items that do not relate to our core operations,
management believes that investors may find it useful to assess our operating
performance if the measures are presented without these items because their
financial impact does not reflect ongoing operating performance.



Non-GAAP earnings (loss) is not a measure of liquidity under GAAP, or otherwise,
and is not an alternative to cash flow from continuing operating activities,
despite the advantages regarding the use and analysis of these measures as
mentioned above. Non-GAAP earnings (loss) and Non-GAAP earnings (loss) per
diluted share, as disclosed in this Annual Report on Form 10-K, have limitations
as analytical tools, and you should not consider these measures in isolation or
as a substitute for analysis of our results as reported under GAAP; nor are
these measures intended to be measures of liquidity or free cash flow for our
discretionary use.



                                      23





To properly and prudently evaluate our business, we encourage readers to review
the GAAP financial statements included elsewhere in this Annual Report on
Form 10-K, and not rely on any single financial measure to evaluate our
business. The following table sets forth reconciliations of Non-GAAP loss to net
loss, the most directly comparable GAAP-based measure, as well as Non-GAAP loss
per diluted share to net loss per diluted share, the most directly comparable
GAAP-based measure.



                                                                Year ended December 31,
(in thousands, except per share data)                            2020      

2019

Non-GAAP Earnings (Loss) Reconciliation
Net loss (GAAP)                                              $     (7,158 )     $    (7,783 )
Non-cash valuation adjustments to liabilities                        (120 )             (99 )
Interest expense                                                      145                76
Stock-based compensation expense                                    4,138  
          1,216
Severance expense (1)                                                 360                 -
Non-GAAP loss                                                $     (2,635 )     $    (6,590 )

Non-GAAP Earnings (Loss) per Diluted Share Reconciliation Net loss per common share (GAAP) - diluted

                   $      (0.77 )     $     (0.97 )
Non-cash valuation adjustments to liabilities                       (0.01 )           (0.01 )
Interest expense                                                     0.02              0.01
Stock-based compensation expense                                     0.44              0.16
Severance expense (1)                                                0.04                 -
Non-GAAP loss per diluted share (2)                          $      (0.28 )     $     (0.81 )
Diluted weighted average shares (3)                                 9,313  
          8,107



(1) Represents severance expense associated with the move of our technology

center to Portland, Oregon, and is exclusive of accrued vacation paid upon

        termination of employment.

    (2) Non-GAAP earnings per adjusted diluted share for our common stock is
        computed using the more dilutive of the two-class method or the
        if-converted method.



(3) The number of diluted weighted average shares used for this calculation is

        the same as the weighted average common shares outstanding share count
        when the Company reports a GAAP and non-GAAP net loss.



Liquidity and Capital Resources



Working Capital


As of December 31, 2020, we had $9.1 million in cash and working capital of $5.6
million. The increase in working capital in 2020 was primarily a result of a
public offering whereby the Company raised net proceeds of $7.8 million by
issuing 473,239 shares of its common stock, as well as $880,000 received from a
cash exercise of warrants by Sero Capital. We intend to use the net proceeds
from this offering for working capital and general corporate purposes.



In addition, on February 11, 2021, we entered into an At Market Issuance Sales
Agreement (the "Sales Agreement") with B. Riley Securities, Inc. ("Agent") under
which the Company may offer and sell, from time to time at its sole discretion,
shares of its common stock to or through the Agent as its sales agent, having an
aggregate offering price of up to $30 million. As of March 8, 2021, we had sold
a total of 378,108 shares of common stock under this Sales Agreement for total
proceeds of approximately $14.1 million, net of estimated transaction costs.



These capital raises contributed to the improvement in our cash and working capital positions, and we believe that the Company has sufficient liquidity to continue as a going concern through the next twelve months.




While the Company has been successful in raising capital, there is no assurance
that it will be successful at raising additional capital in the future.
Additionally, if the Company's plans are not achieved and/or if significant
unanticipated events occur, the Company may have to further modify its business
plan, which may require us to raise additional capital or reduce expenses.


                               At December 31,
 (in thousands)               2020         2019
Current assets              $ 14,631     $  5,608
Current liabilities           (9,015 )     (6,726 )

Working capital (deficit) $ 5,616 $ (1,118 )




                                      24





Cash Flows



                                              Year ended December 31,
(in thousands)                                  2020             2019

Net cash used in operating activities $ (1,906 ) $ (5,617 ) Net cash used in investing activities

             (1,298 )          (363 )
Net cash provided by financing activities         10,327           2,210
Net increase (decrease) in cash             $      7,123       $  (3,770 )




For the year ended December 31, 2020, in relation to the prior year, cash used
in operating activities decreased primarily due to an increase in our paying
customer base leading to our revenue growth. The effect of higher collections
from this expanded customer base was partially offset by the increased personnel
and sales and marketing costs, primarily driven by the increase in headcount and
related expenses and higher consulting and third-party costs to support the
Company's growth. In addition, the Company paid $360,000 in severance, as well
as $66,000 in accrued vacation, associated with the relocation of our technology
center to Portland, Oregon, as part of our strategic plan to build scalable
technology to improve efficiency.



For the year ended December 31, 2020, in relation to the prior year, cash used
in investing activities increased primarily due to investment in new
technologies for enhancements to our legacy solutions, product development, as
well as patents costs to protect our intellectual property and solidify our
portfolio.



For the year ended December 31, 2020, in relation to the prior year, cash
provided by financing activities increased primarily due to net proceeds of $7.8
million that we received from a public offering in the third quarter of 2020,
whereby we issued 473,239 shares of our common stock. We intend to use the
proceeds from this offering for working capital and general corporate purposes,
including the implementation of our business plan and growth of current
operations. In addition, in the second quarter of 2020, we obtained a $1.3
million PPP Loan. The increase in cash from financing activities due to the
capital raise and PPP Loan was partially offset by a $1 million reduction in
proceeds from the exercise of options and warrants, which totaled $1.3 million
and $2.3 million in the years ended December 31, 2020 and 2019, respectively.



Off-Balance Sheet Arrangements




We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to stockholders.



Critical Accounting Policies



The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with the accounting principles generally accepted in the United States.
Preparing financial statements requires our management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses. These estimates and assumptions are affected by our management's
application of accounting policies.



The following is a summary of the Company's most critical accounting policies.
Refer to Note 3 - Significant Accounting Policies to our financial statements
included in Part II, Item 8 for a complete discussion of the significant
accounting policies and methods used in the preparation of our financial
statements.



                                      25





Revenue Recognition


The Company derives revenue primarily from the sale of internally-developed
software by a software as a service ("SaaS") delivery model, through our direct
sales force or through our Partner and Marketplace channel. SaaS fees include
support and maintenance. The Company also derives revenue from PDF remediation
and Mobile App report services. The Company recognizes revenue when delivery of
the promised goods or services is transferred to its customers, in an amount
that reflects the consideration that the Company expects to be entitled to in
exchange for those goods or services.



Performance obligations are the unit of accounting for revenue recognition and
generally represent the distinct goods or services that are promised to the
customer. If we determine that we have not satisfied a performance obligation,
we will defer recognition of the revenue until the performance obligation is
deemed to be satisfied. SaaS agreements are generally non-cancelable, although
clients typically have the right to terminate their contracts for cause if we
fail to perform material obligations.



Our SaaS (also referred to as "subscription") revenue is recognized on a ratable
basis over the contractual subscription term of the arrangement beginning on the
date that our service is made available to the customer. Certain SaaS fees are
invoiced in advance on an annual, semi-annual, or quarterly basis. Any funds
received for services not provided yet are held in deferred revenue and are
recorded as revenue when the related performance obligations have been
satisfied.



Non-subscription revenue consists of PDF remediation and Mobile App report services and is recognized upon delivery. Consideration payable under these arrangements is based on usage.




Refer to Note 3 - Significant Accounting Policies to our financial statements
included in Part II, Item 8 for additional information regarding our revenue
recognition policies.


Allowance for Doubtful Accounts




Accounts receivables are comprised of amounts owed the Company for solutions and
services purchased. Contracts with individual clients and resellers determine
when receivables are due and payable. In determining the allowances for doubtful
accounts, the unpaid receivables are reviewed periodically to determine the
payment status based upon the most currently available information. During these
periodic reviews, the Company determines the required allowances for doubtful
accounts for estimated losses resulting from the unwillingness or inability of
its clients or resellers to make required payments.



Stock-Based Compensation


The Company measures the cost of services received in exchange for an award of
equity instruments based on the fair value of the award measured on the grant
date. The fair value amount is then recognized over the requisite vesting period
during which services are required to be provided in exchange for the award.



The fair value of options and warrants awards is measured on the grant date
using a Black-Scholes option pricing model. We estimate the fair value of
restricted stock unit awards with time- or performance-based vesting using the
value of our common stock on the date of grant. We estimate the fair value of
restricted stock units with market-based conditions using a Monte Carlo
simulation model on the date of grant.



Stock-based compensation expense is recorded by the Company in the same expense
classifications in the statements of operations as if such amounts were paid in
cash. Refer to Note 3 - Significant Accounting Policies to our financial
statements included in Part II, Item 8 for additional information regarding
our
stock-based compensation.


Capitalization of Software Development Costs




In accordance with ASC 350-40, the Company capitalizes certain computer software
and software development costs incurred in connection with developing or
obtaining computer software for internal use when both the preliminary project
stage is completed, and it is probable that the software will be used as
intended. Capitalized software costs include only (i) external direct costs of
materials and services utilized in developing or obtaining computer software and
(ii) compensation and related benefits for employees who are directly associated
with the software project. Capitalized software costs are included in intangible
assets on our balance sheet and amortized on a straight-line basis when placed
into service over the estimated useful lives of the software. Amortization
expense is included in cost of revenue on the statements of operations.



                                      26

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All news about AUDIOEYE, INC.
04/16AUDIOEYE  : DealerCenter Selects AudioEye as Digital Accessibility Partner
PR
03/22AUDIOEYE  : Chris Hundley Joins AudioEye as Chief Technology Officer
PR
03/15AUDIOEYE INC  : Change in Directors or Principal Officers, Financial Statements ..
AQ
03/11AUDIOEYE : Q4 Earnings Snapshot
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03/11AUDIOEYE  : Management's Discussion and Analysis of Financial Condition and Resu..
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03/11AUDIOEYE  : Reports Narrower Q4 Non-GAAP Net Loss/Share, Record Revenue; Guides ..
MT
03/11AUDIOEYE INC  : Results of Operations and Financial Condition, Change in Directo..
AQ
03/11AUDIOEYE  : Earnings Flash (AEYE) AUDIOEYE Reports Q4 Revenue $5.6M, vs. Street ..
MT
03/11AUDIOEYE  : Earnings Flash (AEYE) AUDIOEYE Reports Q4 Loss $-0.09, vs. Street Es..
MT
03/11AUDIOEYE  : Reports Record Fourth Quarter and Full Year 2020 Results
PR
More news
Financials (USD)
Sales 2021 31,8 M - -
Net income 2021 -6,84 M - -
Net cash 2021 5,48 M - -
P/E ratio 2021 -32,4x
Yield 2021 -
Capitalization 247 M 247 M -
EV / Sales 2021 7,58x
EV / Sales 2022 5,43x
Nbr of Employees 89
Free-Float 43,1%
Chart AUDIOEYE, INC.
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AudioEye, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends AUDIOEYE, INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 2
Average target price 38,00 $
Last Close Price 21,09 $
Spread / Highest target 109%
Spread / Average Target 80,2%
Spread / Lowest Target 51,7%
EPS Revisions
Managers and Directors
NameTitle
David D. Moradi CEO, Director & Chief Strategy Officer
Dominic Varacalli President
Sachin Barot Chief Financial Officer
Carr Bettis Executive Chairman
Chris Hundley Chief Technology Officer
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