UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 13, 2022
AUDIOEYE, INC.
(Exact name of registrant as specified in charter)
| Delaware | 001-38640 | 20-2939845 |
| State of Other Jurisdiction of Incorporation | Commission File Number | IRS Employer Identification No. |
5210 E. Williams Circle, Suite 750
Tucson, Arizona 85711
(Address of principal executive offices / Zip Code)
(866) 331-5324
(Registrant’s telephone number, including area code)
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. |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act. |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
| Common Stock, par value $0.00001 per share | AEYE | The Nasdaq Capital Market |
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 2.02 Results of Operations and Financial Condition.
On January 14, 2022, AudioEye, Inc. (the “Company”) issued a press release announcing certain preliminary estimated unaudited financial results for the fourth quarter ended December 31, 2021. A copy of the press release is attached hereto as Exhibit 99.1.
The preliminary estimated results are subject to completion of the Company’s customary year-end closing, review and audit procedures and are not a comprehensive statement of its financial results for the three months ended December 31, 2021. The Company cautions that its final results for the fiscal year ended December 31, 2021 that it will file with the SEC could include financial results for the three months ended December 31, 2021 that vary significantly from these preliminary estimates as a result of the completion of its customary year-end closing, review and audit procedures and other developments arising between now and the time that the Company’s financial results for the fiscal year ended December 31, 2021 are finalized. These preliminary estimates should not be viewed as a substitute for complete financial statements prepared in accordance with GAAP and they are not necessarily indicative of the results to be achieved in any future period. Accordingly, you should not place undue reliance on these preliminary estimates. The preliminary estimates of results have been prepared by, and are the responsibility of, the Company’s management. MaloneBailey LLP (“MaloneBailey”), the Company’s independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary financial data. Accordingly, MaloneBailey does not express an opinion or any other form of assurance with respect thereto.
The information set forth in this Item 2.02 and in Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 13, 2022, David Moradi, the Interim Chief Executive Officer and Chief Strategy Officer of the Company, was appointed the Company’s Chief Executive Officer.
Mr. Moradi, age 46, has served as Interim Chief Executive Officer and Chief Strategy Officer since August 2020 and as a director since November 2019. Mr. Moradi is an entrepreneur, an investor, and advisor to numerous technology companies. In September 2018, Mr. Moradi founded and became Chief Executive Officer of Sero Capital LLC, a private investment firm that focuses on growth opportunities in the technology sector. Sero Capital LLC is a principal stockholder of the Company. Mr. Moradi also co-founded and is Executive Chairman of First Contact Entertainment Inc., a virtual reality game development studio. He founded and was Chief Executive Officer of Anthion Management, a technology-focused investment fund investing in early stage technology companies, public equities, corporate debt and real estate until 2013, when Anthion Management was converted to a family office. Prior to founding Anthion Management, Mr. Moradi was a portfolio manager at Pequot Capital Management and, prior to that, an analyst and portfolio manager for Soros Fund Management. Mr. Moradi started his career as a special situations analyst at Imperial Capital LLC. Mr. Moradi is also the founder and Chairman of the David Moradi Foundation, a charitable foundation that supports education and veterans. He graduated with a B.A. in psychology from the University of California, Los Angeles.
There are no arrangements or understandings between Mr. Moradi and any other person pursuant to which he was selected as an officer of the Company. There are no family relationships between Mr. Moradi and any director or executive officer of the Company. Mr. Moradi is not and has not been a party to any transaction required to be disclosed herein pursuant to Item 404(a) of Regulation S-K.
Item 7.01 Regulation FD Disclosure.
On January 14, 2022, the Company issued press releases announcing the matters described in Item 2.02 and Item 5.02, above. Copies of the Company’s press releases are furnished herewith as Exhibits 99.1 and 99.2.
The information set forth in this Item 7.01 and in Exhibits 99.1 and 99.2 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such section nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits:
| Exhibit | |
| Number | Description |
| 99.1 | Press release announcing preliminary outlook for fourth quarter results, issued January 14, 2022 |
| 99.2 | Press release announcing David Moradi’s appointment as CEO, issued January 14, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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.
| January 20, 2022 | AudioEye, Inc. | |
| (Registrant) | ||
| By | /s/ James Spolar | |
| Name: James Spolar | ||
| Title: General Counsel and Secretary | ||
Exhibit 99.1
AudioEye Announces Preliminary Outlook for Fourth Quarter Results
Twenty-Fourth Consecutive Period of Record Revenue
TUCSON, Ariz. — January 14, 2022 — (NASDAQ: AEYE), an industry-leading digital accessibility platform delivering website accessibility compliance to businesses of all sizes, provided a customer update and its preliminary outlook for revenue, monthly recurring revenue, and net loss for the fourth quarter 2021.
Preliminary Fourth Quarter 2021 Updates
| ● | As of December 31, 2021, monthly recurring revenue (MRR) is expected to be about $2.2 million representing an increase of 16% year over year |
| ● | Fourth quarter 2021 revenue is expected to be in the range of $6.4 million to $6.5 million representing an increase of 14-16% year over year |
| ● | Net loss for the fourth quarter 2021 is expected to be between $5.2 million and $4.9 million, inclusive of expected litigation expense in the range of $0.9 million to $1.1 million and expected stock based compensation expense in the range of $2.1 million to $2.3 million (both of which we expect to exclude from our non-GAAP loss for the quarter) |
| ● | Ended the fourth quarter with a customer count of approximately 82,000 representing an increase of 156% year over year |
| ● | Renewed significant contract with global HR and payroll software and service company in December |
| ● | Signed a major agency and a large financial institution |
“AudioEye’s results in the fourth quarter reflect significant progress across product development and sales. Our customers started to take full advantage of our newly launched Issue Reporting dashboard, which enables them to take proactive action and address the most pressing accessibility issues faster and at scale. The new feature, coupled with our human assisted technology, allows us to deepen our relationships with existing customers and attract new ones,” said David Moradi, CEO of AudioEye. “Highlights in the quarter include renewing a significant contract with a global HR and payroll software and service company, signing a major agency and a large financial institution while experiencing strong growth in the marketplace channel. We are well-positioned for the future and look forward to supporting our customers with new innovations and a comprehensive web accessibility platform in our mission to eradicate all barriers to digital access.”
About AudioEye
AudioEye is an industry-leading digital accessibility platform delivering ADA and WCAG compliance at scale. By combining easy-to-use technology and subject matter expertise, AudioEye helps companies and content creators solve every aspect of web accessibility — from finding and resolving issues to navigating legal compliance, to ongoing monitoring and upkeep. Trusted by the FCC, ADP, SSA, Samsung, and others, AudioEye delivers automated remediations and continuous monitoring for accessibility issues without making fundamental changes to website architecture, source code, or browser-based tools. Join us on our mission to eradicate barriers to digital access, visit www.audioeye.com.
Cautionary Language
Our preliminary estimated results are subject to completion of our customary year-end closing, review and audit procedures and are not a comprehensive statement of our financial results for the three months ended December 31, 2021. We caution that our final results for the fiscal year ended December 31, 2021 that we will file with the SEC could include financial results for the three months ended December 31, 2021 that vary significantly from these preliminary estimates as a result of the completion of our customary year-end closing, review and audit procedures and other developments arising between now and the time that our financial results for the fiscal year ended December 31, 2021 are finalized. These preliminary estimates should not be viewed as a substitute for complete financial statements prepared in accordance with GAAP and they are not necessarily indicative of the results to be achieved in any future period. Accordingly, you should not place undue reliance on these preliminary estimates. The preliminary estimates of results included above have been prepared by, and is the responsibility of, the Company’s management. MaloneBailey LLP (“MaloneBailey”), the Company’s independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to the accompanying preliminary financial data. Accordingly, MaloneBailey does not express an opinion or any other form of assurance with respect thereto.
Forward-Looking Statements
Any statements in this press release about AudioEye’s expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. Forward-looking statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “should”, “confident”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements contained herein include, but are not limited to, statements regarding anticipated contributions from new sales channels, long-term growth prospects, opportunities in the digital accessibility industry, our revenue and MRR guidance, and our expectation of investments in marketing and sales. These statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements, including the variability of AudioEye’s revenue and financial performance; risks associated with our new platform and sales channels; product development and technological changes; the acceptance of AudioEye’s products in the marketplace by existing and potential future customers; competition; inherent uncertainties and costs associated with litigation; general economic conditions; and uncertainties regarding the impact on our business and the overall economy from the coronavirus (COVID-19) outbreak. These and other risks are described more fully in AudioEye’s filings with the Securities and Exchange Commission (the “SEC”), including AudioEye’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021 and in subsequent filings with the SEC. There may be events in the future that AudioEye is not able to predict accurately or over which AudioEye has no control. Forward-looking statements reflect management’s view as of the date of this press release, and AudioEye urges you not to place undue reliance on these forward-looking statements. AudioEye does not undertake any obligation to update such forward-looking statements to reflect events or uncertainties after the date hereof. 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.
About 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 sales 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.
Corporate Contact:
AudioEye, Inc.
Dr. Carr Bettis, Executive Chairman
cbettis@audioeye.com
Investor Contact:
Matt Glover or Tom Colton
AEYE@gatewayir.com
(949) 574-3860
Exhibit 99.2
AudioEye Appoints David Moradi as Chief Executive Officer
TUCSON, Ariz. — January 14, 2022 —The Board of Directors of AudioEye, Inc. (NASDAQ: AEYE), an industry-leading digital accessibility platform delivering website accessibility compliance to businesses of all sizes, has appointed David Moradi as its Chief Executive Officer (CEO), effective January 13th, 2022.
David Moradi has served as the Company’s interim CEO over the last 18 months, a period of significant progress in the Company’s transition to a highly scalable platform with industry-leading gross margins and considerable improvements in the Company’s product, technology, and go-to-market.
Executive Chairman Carr Bettis said, “Over the past two years, David has skillfully, tenaciously, and tirelessly led AudioEye’s transformation into a higher margin and more scalable enterprise with a truly differentiated product that brings transparency to the issues of web accessibility. He sets the tone with his relentless pursuit of excellence and his passion for eradicating all barriers to digital accessibility, and he has assembled an extremely strong leadership team to help achieve this mission. We value not only his strong leadership and commitment but also the significant personal financial investment he has made in AudioEye, which we believe strengthens the alignment of interest between management and other shareholders.”
David Moradi is an entrepreneur, investor, and advisor to numerous market-leading technology companies. Moradi is Co-Founder and Executive Chairman of First Contact Entertainment, a leading virtual reality (VR) game development studio. He is also the founder and CEO of Sero Capital LLC, a family office that invests in all stages of a company's lifecycle, from angel investing to late-stage private investments.
Before First Contact and Sero Capital, Moradi was the founder and CEO of Anthion Management, a technology fund with peak assets exceeding one billion dollars. Before Anthion, Moradi was a Portfolio Manager at firms including Pequot Capital Management and Soros Fund Management. Before that, he was a special situations analyst at Imperial Capital. Moradi holds a B.A. in psychology from the University of California, Los Angeles. He is also the founder and Chairman of the David Moradi Foundation, a charitable foundation supporting education and veterans.
Moradi added, “My tenure at AudioEye began as Chair of the Strategic Committee of the board of directors in 2019, with the goal of building a scalable product with high gross margins. We have made tremendous progress on these initiatives, and I am excited to continue working with one of the best leadership teams I’ve worked alongside, as well as exceptional employee talent. We have hired over 90 people over the last 18 months, including every member of leadership, and now have the strongest team at any point in the Company’s history.”
About AudioEye
AudioEye is an industry-leading digital accessibility platform delivering ADA and WCAG compliance at scale. By combining easy-to-use technology and subject matter expertise, AudioEye helps companies and content creators solve every aspect of web accessibility — from finding and resolving issues to navigating legal compliance, to ongoing monitoring and upkeep. Trusted by the FCC, ADP, SSA, Samsung, and others, AudioEye delivers automated remediations and continuous monitoring for accessibility issues without making fundamental changes to website architecture, source code, or browser-based tools. Join us on our mission to eradicate barriers to digital access, visit www.audioeye.com.
Corporate Contact:
AudioEye, Inc.
Dr. Carr Bettis, Executive Chairman
cbettis@audioeye.com
Investor Contact:
Matt Glover or Tom Colton
AEYE@gatewayir.com
(949) 574-3860