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What changed in AUDIOEYE INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AUDIOEYE INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+149 added−167 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-07)

Top changes in AUDIOEYE INC's 2024 10-K

149 paragraphs added · 167 removed · 119 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFurthermore, the Department of Transportation has issued rules interpreting and implementing the Air Carrier Access Act and setting forth website accessibility standards for air carriers. This focus on website accessibility is growing internationally as well, with over 100 countries having ratified the U.N. Convention on the Rights of Persons with Disabilities.
Biggest changeIn 2010, Congress enacted the 21st Century Communications and Video Accessibility Act in an effort to update telecommunications protections for people with disabilities. Furthermore, the Department of Transportation has issued rules interpreting and implementing the Air Carrier Access Act and setting forth website accessibility standards for air carriers.
AudioEye stands out among its competitors because it offers automated and human assisted technological remediations and continuous monitoring of accessibility issues without fundamental changes to the website architecture. We also recognize that automation alone cannot fix all accessibility issues, which is why we also offer certified accessibility experts, who can provide human assisted technological testing and remediations.
AudioEye stands out among its competitors because it offers automated and human assisted technological fixes and continuous monitoring of accessibility issues without fundamental changes to the website architecture. We recognize that automation alone cannot fix all accessibility issues, which is why we also offer certified accessibility experts, who can provide human assisted technological testing and custom fixes.
We use a variety of methods for recruiting including in-house recruiting resources, employee referrals and third-party agencies, when required, and we believe our mission allows us to recruit and retain high-quality talent. We utilize independent contractors to supplement our staff, as needed. None of our employees are represented by a labor union or subject to a collective bargaining agreement.
We use a variety of methods for recruiting, including in-house recruiting resources and employee referrals, and we believe our mission allows us to recruit and retain high-quality talent. We utilize independent contractors to supplement our staff, as needed. None of our employees are represented by a labor union or subject to a collective bargaining agreement.
While these providers may sometimes identify issues for remediation, they typically do not provide remediation. ● Currently, other technology providers attempt to apply compliance remediation strictly through automation technology and accessibility toolbars. ● There are a substantial number of consulting service providers offering website and application accessibility.
While these providers may sometimes identify issues, they typically do not provide fixes or specific recommendations. ● Currently, other technology providers attempt to apply compliance remediation strictly through automation technology and accessibility toolbars. ● There are a substantial number of consulting service providers offering website and application accessibility.
Our offerings provide automated remediations with additional human assisted technologically driven enhancements. We think that as the industry develops, opaque products with unsubstantiated claims will ultimately fail. ● Highly experienced inventors, technologists, and product development team. Our team comprises experienced software and SaaS developers and technologists. Legal and Regulatory Framework Many courts and the U.S.
Our offerings provide automated fixes with additional human assisted technologically 4 Table of Contents driven enhancements. We think that as the industry develops, opaque products with unsubstantiated claims will ultimately fail. ● Highly experienced inventors, technologists, and product development team. Our team comprises experienced software and SaaS developers and technologists. Legal and Regulatory Framework Many courts and the U.S.
We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 17% of our revenue in each of the years ended December 31, 2023 and 2022.
We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 15% and 17% of our revenue in the years ended December 31, 2024 and 2023, respectively.
In addition, the SEC maintains a website at www.sec.gov containing reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 5 Table of Contents
In addition, the SEC maintains a website at www.sec.gov containing reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
AudioEye provides employees with the technology and resources required to have a high-quality remote work experience while remaining connected to teams in other locations. We expect to continue a hybrid of virtual and in-person work in the future. As of December 31, 2023, we had 114 full-time employees.
AudioEye provides employees with the technology and resources required to have a high-quality remote work experience while remaining connected to teams in other locations. We expect to continue a hybrid of virtual and in-person work in the future. 5 Table of Contents As of December 31, 2024, we had 117 full-time employees.
Although the WCAG does not carry force of law, courts may order defendants to substantially comply with the WCAG as a remedy for accessibility violations. Settlements and consent decrees generally require the same.
Certain businesses operating in the EU must ensure compliance or risk penalties. Although the WCAG does not carry force of law, courts may order defendants to substantially comply with the WCAG as a remedy for accessibility violations. Settlements and consent decrees often generally require the same.
AudioEye builds all its products with the primary goal of enhancing the user experience regardless of the end-user’s ability. AudioEye is a marketplace technology leader providing a comprehensive accessibility solution that addresses every aspect of accessibility. ● AudioEye’s software automatically removes digital access barriers every day and has over 400 accessibility test outcomes for real-world users as they navigate websites.
AudioEye builds all its products with the primary goal of enhancing the user experience regardless of the end-user’s ability. AudioEye is a marketplace technology leader providing a comprehensive accessibility solution that addresses every aspect of accessibility. ● AudioEye’s software automatically removes digital access barriers every day and automatically tests for more WCAG criteria than any competitor.
Our typical market sectors include, but are not limited to: ● Finance and banking institutions; ● Travel and hospitality companies; ● Public and private transportation companies; ● Retail and ecommerce companies; ● Educational institutions; ● Food services companies; and ● SaaS service or solution providers.
Our typical market sectors include, but are not limited to: ● Finance and banking institutions; ● Travel and hospitality companies; ● Public and private transportation companies; ● Retail and ecommerce companies; ● Educational institutions; ● Food services companies; and ● SaaS service or solution providers. 3 Table of Contents Intellectual Property Our intellectual property is primarily comprised of copyrights, trademarks, trade secrets, issued patents and pending patent applications.
Similarly, while the DOJ has taken the position that Title III applies to websites and mobile applications, the DOJ has not promulgated regulations laying out compliance standards for websites and mobile applications under Title III of the ADA.
Similarly, while the DOJ has taken the position that Title III applies to websites and mobile applications, the DOJ has not promulgated regulations laying out compliance standards for websites and mobile applications under Title III of the ADA. In the absence of clear guidance, litigants generally measure accessibility using the WCAG, which are promulgated by the World Wide Web Consortium.
The commercial value of these patents is unknown. 3 Table of Contents We plan to continue to invest in research and development and expand our portfolio of proprietary intellectual property.
We have a patent portfolio comprised of twenty-four (24) issued patents in the United States and three (3) pending US patent applications. The commercial value of these patents is unknown. We plan to continue to invest in research and development and expand our portfolio of proprietary intellectual property.
The California Unruh Civil Right Act also prohibits discrimination on the basis of disability, and California Government code Section 11546.7 requires state agency directors to certify that their websites comply with the WCAG. In 2010, Congress enacted the 21st Century Communications and Video Accessibility Act in an effort to update telecommunications protections for people with disabilities.
This growing focus on website and mobile application accessibility is also reflected by other federal and state laws. The California Unruh Civil Right Act also prohibits discrimination on the basis of disability, and California Government code Section 11546.7 requires state agency directors to certify that their websites comply with the WCAG.
We also offer PDF remediation services and Native Mobile App and Audit reports to help our customers with their digital accessibility needs.
Our solutions may be purchased through a subscription service on a month-to-month basis or with one or multi-year terms. We also offer PDF remediation services and mobile application and audit reporting services to help our customers with their digital accessibility needs.
Similarly, some are tailored to either single or a limited number of use cases and lack a holistic approach for addressing compliance and accessibility. AudioEye Solutions At its core, AudioEye’s offering provides an always-on testing, remediation, and monitoring solution that continually improves conformance with WCAG.
Similarly, some are tailored to either single or a limited number of use cases and lack a holistic approach for addressing compliance and accessibility. Further, some companies focus on automation alone, whereas our solutions take a comprehensive approach involving both technology and experts.
This in turn helps businesses and organizations comply with WCAG standards as well as applicable U.S. and foreign accessibility laws. Our technology is capable of immediately identifying and fixing most of the common accessibility errors and addresses a wide range of disabilities including dyslexia, color blindness, epilepsy and more.
Our technology is capable of immediately identifying and fixing most of the common accessibility errors and addresses a wide range of disabilities including dyslexia, color blindness, epilepsy and more. AudioEye also offers additional 2 Table of Contents solutions to provide for enhanced compliance and accessibility, including periodic auditing, custom fixes by experts, and legal support services.
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AudioEye also offers additional solutions to provide for enhanced compliance and accessibility, including periodic auditing, human assisted technological remediations 2 Table of Contents and legal support services. Our solutions may be purchased through a subscription service on a month-to-month basis or with one or multi-year terms.
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AudioEye Solutions At its core, AudioEye’s offering provides ongoing testing, automated fixes, and 24/7 monitoring that continually improves conformance with WCAG. This in turn helps businesses and organizations comply with WCAG standards as well as applicable U.S. and foreign accessibility laws.
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Intellectual Property Our intellectual property is primarily comprised of copyrights, trademarks, trade secrets, issued patents and pending patent applications. We have a patent portfolio comprised of twenty-two (22) issued patents in the United States and two (2) pending US patent applications.
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On April 24, 2024, the DOJ finalized regulations under Title II of ADA, mandating that state and local government websites and mobile applications adhere to the WCAG 2.1 Level AA standards . On May 9, 2024, the U.S.
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In 2023, the DOJ proposed regulations to add specific requirements about web 4 Table of Contents and mobile application accessibility under Title II of the ADA that would apply to state and local governments, although those regulations have not been finalized.
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Department of Health and Human Services (“HHS”) published a rule to add, among other things, specific requirements about web and mobile application accessibility under Section 504 of the Rehabilitation Act that would apply to recipients of Federal financial assistance.
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In the absence of clear guidance, litigants generally measure accessibility using the Web Content Accessibility Guidelines (“WCAG”), which are promulgated by the World Wide Web Consortium. This growing focus on website and mobile application accessibility is also reflected by other federal and state laws.
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This focus on website accessibility is growing internationally as well, with over 100 countries having ratified the U.N. Convention on the Rights of Persons with Disabilities. The European Accessibility Act (EAA) will take effect in June 2025, requiring digital products and services — including websites, e-commerce, and mobile apps — to meet accessibility standards across the European Union (“EU”).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.
Biggest changeThe trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline.
The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as: ● the outcomes of potential future patent litigation; ● our ability to monetize our future patents; ● changes in our industry; ● announcements of technological innovations, new products or product enhancements by us or others; ● announcements by us or others of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments; ● changes in laws or regulations or judicial interpretation of the application of accessibility-related laws and regulations to the internet; ● our failure to meet any financial covenants, to have sufficient liquidity to repay any of our indebtedness, or to refinance our indebtedness on favorable terms, or at all; ● changes in earnings estimates or recommendations by security analysts, if our common stock is covered by analysts; ● investors’ general perception of us; ● future issuances of common stock; ● investors’ future resales of our securities; ● the addition or departure of key personnel; 15 Table of Contents ● general market conditions, including the volatility of market prices for shares of technology companies, generally, and other factors, including factors unrelated to our operating performance; and ● the other factors described in this “Risk Factors” section.
The market price of our common stock may fluctuate significantly in response to numerous factors, some of which are beyond our control, such as: ● the outcomes of potential future patent litigation; ● our ability to monetize our future patents; ● changes in our industry; 15 Table of Contents ● announcements of technological innovations, new products or product enhancements by us or others; ● announcements by us or others of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments; ● changes in laws or regulations or judicial interpretation of the application of accessibility-related laws and regulations to the internet; ● our failure to meet any financial covenants, to have sufficient liquidity to repay any of our indebtedness, or to refinance our indebtedness on favorable terms, or at all; ● changes in earnings estimates or recommendations by security analysts, if our common stock is covered by analysts; ● investors’ general perception of us; ● future issuances of common stock; ● investors’ future resales of our securities; ● the addition or departure of key personnel; ● general market conditions, including the volatility of market prices for shares of technology companies, generally, and other factors, including factors unrelated to our operating performance; and ● the other factors described in this “Risk Factors” section.
Should we be unable to identify or conclude important channel partnerships, or if our partners are unable to meet our expectations, our business prospects and operations could be adversely affected as a result of the devotion of significant managerial effort and Company costs required.
Should we be unable to identify, conclude or maintain important channel partnerships, or if our partners are unable to meet our expectations, our business prospects and operations could be adversely affected as a result of the devotion of significant managerial effort and Company costs required.
The minimum monthly recurring revenue levels commence at $2.3 million and increase for each month after the month ending November 30, 2024 to the greater of $2.3 million and 105.00% of Borrowers’ monthly recurring revenue for the applicable month in the prior year.
The minimum monthly recurring revenue levels commence at $2.3 million and increase for each month after the month ending November 30, 2024 to the greater of $2.3 million and 105% of Borrowers’ monthly recurring revenue for the applicable month in the prior year.
There are inherent risks in integrating these opportunities, which may include: ● the assumption of liabilities of the acquired businesses that could be greater than anticipated; 7 Table of Contents ● incurring significantly higher than anticipated capital expenditures and operating expenses following the acquisition; ● failing to integrate the operations, customers and personnel of the acquired company or business; ● the diversion of financial and management resources from existing operations; ● the potential loss of key employees or existing customers or adverse effects on existing business relationships with suppliers and customers; ● incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill or other assets that could adversely affect our operating results; ● unforeseen risks and liabilities associated with businesses acquired, including any unknown vulnerabilities in acquired technology or compromises of acquired data; and ● failing to achieve the anticipated benefits of the acquisition.
There are inherent risks in integrating these opportunities, which may include: ● the assumption of liabilities of the acquired businesses that could be greater than anticipated; ● incurring significantly higher than anticipated capital expenditures and operating expenses following the acquisition; ● failing to integrate the operations, customers and personnel of the acquired company or business; ● the diversion of financial and management resources from existing operations; ● the potential loss of key employees or existing customers or adverse effects on existing business relationships with suppliers and customers; ● incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill or other assets that could adversely affect our operating results; ● unforeseen risks and liabilities associated with businesses acquired, including any unknown vulnerabilities in acquired technology or compromises of acquired data; and ● failing to achieve the anticipated benefits of the acquisition.
Many of our employees are relatively new to their positions, and we can provide no assurance that our management team will be able to effectively work together or with all of our employees. If they are unable to do so or our new employees do not work effectively, there may be delays in execution of our business and operating strategies.
Some of our employees are relatively new to their positions, and we can provide no assurance that our management team will be able to effectively work together or with all of our employees. If they are unable to do so or our new employees do not work effectively, there may be delays in execution of our business and operating strategies.
The deployment of our products, services, systems and operations will also be vulnerable to damage or interruption from: ● power loss, transmission cable cuts and other telecommunications failures; ● damage or interruption caused by fire, earthquake and other natural disasters; 13 Table of Contents ● computer viruses or software defects; and ● physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control.
The deployment of our products, services, systems and operations will also be vulnerable to damage or interruption from: ● power loss, transmission cable cuts and other telecommunications failures; ● damage or interruption caused by fire, earthquake and other natural disasters; ● computer viruses or software defects; and ● physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control.
We cannot guarantee that we will always meet these covenants or that we can obtain sufficient capital to repay the loan on a timely basis, or obtain refinancing of the loan on satisfactory terms, or at all. 6 Table of Contents Weakened global economic conditions including current and ongoing microeconomic uncertainty may adversely affect our industry, business and results of operations.
We cannot guarantee that we will always meet these covenants or that we can obtain sufficient capital to repay the loan on a timely basis, or obtain refinancing of the loan on satisfactory terms, or at all. Weakened global economic conditions including current and ongoing microeconomic uncertainty may adversely affect our industry, business and results of operations.
In addition, users depend on real-time communications; outages caused by increased traffic could result in delays and system failures. These types of occurrences could cause users to perceive that our products and services do not function properly and could therefore adversely affect our ability to attract and retain strategic partners and customers.
In addition, users depend on real-time communications; outages caused by increased traffic could result in delays and system failures. These types 13 Table of Contents of occurrences could cause users to perceive that our products and services do not function properly and could therefore adversely affect our ability to attract and retain strategic partners and customers.
These provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock. 17 Table of Contents Delaware law may delay or prevent takeover attempts by third parties and therefore inhibit our stockholders from realizing a premium on their stock.
These provisions could limit the price that some investors might be willing to pay in the future for shares of our common stock. Delaware law may delay or prevent takeover attempts by third parties and therefore inhibit our stockholders from realizing a premium on their stock.
Such circumstances, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
Such circumstances, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise 16 Table of Contents additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures and our internal control over financial reporting were effective as of December 31, 2023.
Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures and our internal control over financial reporting were effective as of December 31, 2024.
In addition, such contracts may provide for termination by the government at any time, without cause. 11 Table of Contents If we do not successfully adapt, enhance or develop new products and services in a cost-effective manner to meet customer demand in the rapidly evolving market for next-generation Internet-based applications and services, our business may fail.
In addition, such contracts may provide for termination by the government at any time, without cause. If we do not successfully adapt, enhance or develop new products and services in a cost-effective manner to meet customer demand in the rapidly evolving market for next-generation Internet-based applications and services, our business may fail.
Should we be unable to identify or conclude important strategic transactions, our business prospects and operations could be adversely affected as a result of the devotion of significant managerial effort required, and the challenges of achieving our objectives in the absence of strategic opportunities.
Should we be unable to identify or conclude important strategic transactions, our business prospects and operations could be adversely affected as a result of the devotion of 7 Table of Contents significant managerial effort required, and the challenges of achieving our objectives in the absence of strategic opportunities.
There are a significant 9 Table of Contents number of U.S. and foreign patents and patent applications in our areas of interest, and we believe that there has been, and is likely to continue to be, significant litigation in the industry regarding patent and other intellectual property rights.
There are a significant number of U.S. and foreign patents and patent applications in our areas of interest, and we believe that there has been, and is likely to continue to be, significant litigation in the industry regarding patent and other intellectual property rights.
Although we may devote significant resources and costs to the development of these sales channel s , we may struggle to successfully identify the channel partners, or to successfully conclude transactions with the channel partners.
Although we may devote significant resources and costs to the development of these sales channels, we may struggle to successfully identify the channel partners, or to successfully conclude transactions with the channel partners.
This may result in reduced liquidity of our common stock. Although our shares of common stock are listed on the Nasdaq Capital Market under the symbol “AEYE,” historically trading volume in our common stock has been limited. In addition, our stock has also historically seen significant price volatility, which may reduce the liquidity of our common stock.
Although our shares of common stock are listed on the Nasdaq Capital Market under the symbol “AEYE,” historically trading volume in our common stock has been limited. In addition, our stock has also historically seen significant price volatility, which may reduce the liquidity of our common stock.
No assurance can be given that we can successfully raise additional equity or debt capital, or that such financing will be available to us on favorable terms, if at all. We have a $7.0 million loan due in November 2026 that includes certain financial and liquidity covenants.
No assurance can be given that we can successfully raise additional equity or debt capital, or that such financing will be available to us on favorable terms, if at all. 6 Table of Contents We have a $7.0 million loan due in November 2026 that includes certain financial and liquidity covenants.
While other next-generation Internet-based applications have grown rapidly in personal and professional use, we cannot assure you that the adoption of our products and services will grow at a comparable rate or grow at all. 10 Table of Contents Our success is dependent on our employees, many of whom are relatively new in their positions with the Company.
While other next-generation Internet-based applications have grown rapidly in personal and professional use, we cannot assure you that the adoption of our products and services will grow at a comparable rate or grow at all. Our success is dependent on our employees, some of whom are relatively new in their positions with the Company.
As a result, we may have difficulty competing with larger, established competitors. Generally, these competitors may have: ● substantially greater financial, technical, and marketing resources; ● a larger customer base; 8 Table of Contents ● better name recognition; ● access to different and evolving technologies; and ● more expansive or different product offerings.
As a result, we may have difficulty competing with larger, established competitors. Generally, these competitors may have: ● substantially greater financial, technical, and marketing resources; ● a larger customer base; ● better name recognition; ● access to different and evolving technologies; and ● more expansive or different product offerings.
Should our estimates turn out to be inaccurate or 12 Table of Contents should the business fail to attract new revenue in relation to each respective product or product enhancement, we may have to reverse or write off the related capitalized expenses.
Should our estimates turn out to be inaccurate or should the business fail to attract new revenue in relation to each respective product or product enhancement, we may have to reverse or write off the related capitalized expenses.
Risks Relating to Our Business and Industry We have a history of generating significant losses and may not be able to achieve and sustain profitability. To date, we have not been profitable, and we may never achieve profitability on a full-year or consistent basis. We incurred net losses of $5,872,000 for the year ended December 31, 2023.
Risks Relating to Our Business and Industry We have a history of generating significant losses and may not be able to achieve and sustain profitability. To date, we have not been profitable, and we may never achieve profitability on a full-year or consistent basis. We incurred net losses of $4,254,000 for the year ended December 31, 2024.
Through their collective ownership of our outstanding stock, such holders, if they were to act together, would be close to controlling the voting of our shares at all meetings of stockholders and, because the common stock does not have cumulative voting rights, to determining the outcome of the election of all of our directors and determining corporate and stockholder action on other matters.
Through their collective ownership of our outstanding stock, such insider holders, if they were to act together, would have significant influence over the voting of our shares at all meetings of stockholders and, because the common stock does not have cumulative voting rights, to determining the outcome of the election of all of our directors and determining corporate and stockholder action on other matters.
In addition, we may incur significant costs in connection with seeking acquisitions or other strategic opportunities regardless of whether the transaction is completed. Should we be successful in consummating these opportunities, we may not be able to do so on terms that are beneficial to AudioEye.
In addition, we may incur significant costs in connection with seeking acquisitions or other strategic opportunities regardless of whether the transaction is completed. Even if we are able to consummate these opportunities, we may not be able to do so on terms that are beneficial to AudioEye.
As of December 31, 2023, we had an accumulated deficit of $89,476,000. If we continue to experience losses, we may not be able to continue our operations, and investors may lose their entire investment. We continue to pursue business through a variety of channels.
As of December 31, 2024, we had an accumulated deficit of $95,746,000. If we continue to experience losses, we may not be able to continue our operations, and investors may lose their entire investment. We continue to pursue business through a variety of channels.
Our Certificate of Incorporation authorizes the issuance of up to 50,000,000 shares of common stock with a $0.00001 par value per share and 10,000,000 shares of preferred stock with a $0.00001 par value per share, of which, as of December 31, 2023, approximately 11,711,000 shares of common stock were issued and outstanding.
Our Certificate of Incorporation authorizes the issuance of up to 50,000,000 shares of common stock with a $0.00001 par value per share and 10,000,000 shares of preferred stock with a $0.00001 par value per share, of which, as of December 31, 2024, approximately 12,285,000 shares of common stock were issued and outstanding.
As of December 31, 2023, we also had outstanding options to purchase an aggregate of approximately 112,000 shares of our common stock, and unvested, or vested but not yet settled, restricted stock units covering an aggregate of approximately 1,707,000 shares of common stock.
As of December 31, 2024, we also had outstanding options to purchase an aggregate of approximately 36,000 shares of our common stock, and unvested, or vested but not yet settled, restricted stock units covering an aggregate of approximately 1,315,000 shares of common stock.
We may pursue new strategic opportunities, including acquisitions, which may result in the use of a significant amount of our management resources or significant costs, and we may not be able to consummate those opportunities or on beneficial terms. We are seeking strategic opportunities, which may include acquisitions, to help us pursue our business objectives.
We may pursue new strategic opportunities, including acquisitions, which may result in the use of a significant amount of our management resources or significant costs, and we may not be able to consummate those opportunities or on beneficial terms.
If we are not able to adequately protect our patented rights, our operations may be negatively impacted. Our ability to compete largely depends on the superiority, uniqueness and value of our technology and intellectual property.
If it does not, our results of operations and financial condition could be adversely affected. If we are not able to adequately protect our patented rights, our operations may be negatively impacted. Our ability to compete largely depends on the superiority, uniqueness and value of our technology and intellectual property.
As of January 31, 2024, our Chief Executive Officer alone beneficially owned over 29% of the voting power of our outstanding shares of common stock.
As of January 31, 2025, our Chief Executive Officer beneficially owned over 20% of the voting power of our outstanding shares of common stock.
Provisions of our Certificate of Incorporation and bylaws could discourage potential acquisition proposals and could deter or prevent a change in control. Some provisions in our Certificate of Incorporation and bylaws, as well as statutes, may have the effect of delaying, deterring or preventing a change in control.
Some provisions in our Certificate of Incorporation and bylaws, as well as statutes, may have the effect of delaying, deterring or preventing a change in control.
If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to report financial results accurately or on a timely basis, or to detect fraud, which could have a material adverse effect on our business and stock price.
We cannot assure you that we will be able to attract or retain such personnel. 14 Table of Contents If we fail to maintain effective internal control over financial reporting and effective disclosure controls and procedures, we may not be able to report financial results accurately or on a timely basis, or to detect fraud, which could have a material adverse effect on our business and stock price.
Our future development will require additional capital, and we may be unable to obtain needed capital or financing on satisfactory terms, or at all, which would prevent us from fully developing our business and generating revenues.
Our future development will require additional capital, and we may be unable to obtain needed capital or financing on satisfactory terms, or at all, which would prevent us from fully developing our business and generating revenues. As of December 31, 2024, we had $5.7 million in cash.
We may not be able to successfully integrate newly acquired businesses or other strategic relationships, and we may not be able to fully realize the potential benefit of such opportunities. If we do locate and consummate important acquisitions or strategic relationships, we may not be able to integrate those opportunities or successfully realize their full benefit.
If we do locate and consummate important acquisitions or strategic relationships, we may not be able to integrate those opportunities or successfully realize their full benefit.
The development of products and services and other patented technology involves significant technological and business risks and requires substantial expenditures and lead time. We may be unable to use new technologies effectively. Updating our technology internally and licensing new technology from third parties may also require us to incur significant additional expenditures.
The development of products and services and other patented technology involves significant technological and business risks and requires substantial expenditures and lead time. We may be unable to use new technologies effectively.
Our business greatly depends on the growth of online services, Internet of Things (“IOT”), kiosks, streaming, and other next-generation Internet-based applications, and there is a risk that such growth may not occur as expected, or at all, which would harm our business.
More aggressive domestic or international regulation of the Internet may materially and adversely affect our business, financial condition, operating results, and future prospects. 10 Table of Contents Our business greatly depends on the growth of online services, Internet of Things (“IOT”), kiosks, streaming, and other next-generation Internet-based applications, and there is a risk that such growth may not occur as expected, or at all, which would harm our business.
If we fail to address competitive developments quickly and effectively, we may not be able to remain a viable business. We acquired the Bureau of Internet Accessibility Inc. (“BOIA”) on March 9, 2022, and we cannot assure you that will successfully integrate the business or that the acquisition will bring us the expected benefits.
If we fail to address competitive developments quickly and effectively, we may not be able to remain a viable business. We acquired ADA Site Compliance, LLC (“ADA Site Compliance”) on September 27, 2024, and we cannot assure you that will successfully integrate the business or that the acquisition will bring us the expected benefits.
These companies may incorporate other competitive technologies into their product offerings, whether developed internally or by third parties. There are also established consultants who offer services to help their customers obtain compliance with accessibility standards. In many cases these consultants compete for the same funding from our prospective customers.
There are also established consultants who offer services to help their customers obtain compliance with accessibility standards. In many cases these consultants compete for the same funding from our prospective customers.
Regardless of whether any future claims are valid or can be successfully asserted, defending against such claims could cause us to incur significant costs, could jeopardize or substantially delay a successful outcome in any future litigation, and could divert resources away from our other activities.
We cannot assure you that infringement or invalidity claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against us or that any such assertions or prosecutions will not materially adversely affect our business. 9 Table of Contents Regardless of whether any future claims are valid or can be successfully asserted, defending against such claims could cause us to incur significant costs, could jeopardize or substantially delay a successful outcome in any future litigation, and could divert resources away from our other activities.
Additionally, any such failure may also negatively impact our operating results and financial condition, impair our ability to timely file our periodic and other reports with the SEC, consume a significant amount of management’s time, and cause us to incur substantial additional costs relating to the implementation of remedial measures. 14 Table of Contents Risks Related to the Market for Our Common Stock Although our shares of common stock are listed on the Nasdaq Capital Market, historically we have had a limited trading volume and a higher price volatility.
Additionally, any such failure may also negatively impact our operating results and financial condition, impair our ability to timely file our periodic and other reports with the SEC, consume a significant amount of management’s time, and cause us to incur substantial additional costs relating to the implementation of remedial measures.
On March 9, 2022, we acquired Bureau of Internet Accessibility Inc. (“BOIA”). We cannot assure you that we will be able to successfully integrate the business or that we will receive the expected benefits from the acquisition.
On September 27, 2024, we acquired ADA Site Compliance. We cannot assure you that we will be able to successfully integrate the business or that we will receive the expected benefits from the acquisition.
As a result, we may need to raise additional capital through future private or public equity offerings, strategic alliances or debt financing.
Our business plan will require additional capital expenditures, and our capital outlays could increase substantially over the next several years as we implement our business plan. As a result, we may need to raise additional capital through future private or public equity offerings, strategic alliances or debt financing.
Although we may devote significant time and resources in pursuit of such transactions, we may struggle to successfully identify such opportunities, or to successfully conclude transactions.
We have sought in the past, and are continuing to seek, strategic opportunities, which may include acquisitions, to help us pursue our business objectives. Although we may devote significant time and resources in pursuit of such transactions, we may struggle to successfully identify such opportunities, or to successfully conclude transactions.
If we are unable to continually add software and hardware, effectively upgrade our systems and network infrastructure, and take other steps to improve the efficiency of our systems, it could cause system interruptions or delays and adversely affect our operating results.
If we are unable to continually add software and hardware, effectively upgrade our systems and network infrastructure, and take other steps to improve the efficiency of our systems, it could cause system interruptions or delays and adversely affect our operating results. 11 Table of Contents Our computer and communications systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses, physical or electronic break-ins, and similar events or disruptions.
In addition, we must maintain (i) at all times a minimum liquidity of not less than $2.0 million (plus, prior to our payment in full of an earnout related to our BOIA acquisition, an amount equal to the greater of $2.1 million and the expected amount of the earnout) and (ii) minimum monthly recurring revenue levels measured on a trailing three (3) month average basis as of the last day of each calendar month.
In addition, we must maintain (i) minimum liquidity of $2.0 million, subject to a higher minimum liquidity requirement in order to make certain payments; and (ii) minimum monthly recurring revenue levels measured on a trailing three month average basis as of the last day of each calendar month.
We have experienced and will continue to experience competition as more companies seek to provide products and services similar to our products and services and seek to take advantage of changes in technologies. Because larger and better-financed competitors may affect our ability to compete in the marketplace and achieve profitability, our business may fail.
Because larger and better-financed competitors may affect our ability to compete in the marketplace and achieve profitability, our business may fail. Competition in our market is intense, and we expect competition for our products and services to become even more intense.
We cannot assure you that we will succeed in the anticipated operation of our business plan. If our business plan proves to be unsuccessful, our business may fail, and you may lose some or all of your investment.
We cannot assure you that we will succeed in the anticipated operation of our business plan.
If our products and services do not continue to gain market acceptance, we may not be able to fund future operations.
Updating our technology internally and licensing new technology from third parties may also require us to incur significant additional expenditures. 12 Table of Contents If our products and services do not continue to gain market acceptance, we may not be able to fund future operations.
Further, while a significant portion of the aggregate consideration for BOIA is based on BOIA’s revenues for 2022 and 2023, BOIA may ultimately not perform as we hope both during and subsequent to the earn-out period. If it does not, our results of operations and financial condition could be adversely affected.
Further, while a significant portion of the aggregate consideration for ADA Site Compliance is based on ADA Site Compliance’s annual recurring and non-recurring revenue targets measured as of December 31, 2025, ADA Site Compliance may ultimately not perform as we hope both during and subsequent to the earn-out period.
Competition in our market is intense, and we expect competition for our products and services to become even more intense. We compete directly against other companies offering similar products and services that compete or will compete directly with our proposed products and services. We also compete against established vendors in our markets.
We compete directly against other companies offering similar products and services that compete or will compete directly with our proposed products and services. We also compete against established vendors in our markets. These companies may incorporate other competitive technologies into their product offerings, whether developed internally or by third parties.
As of January 31, 2024, our directors and executive officers beneficially owned an aggregate of 4,718,606 of our outstanding shares of common stock, which represents approximately 40% of the aggregate voting power of our outstanding shares of common stock.
Risks Relating to Our Charter Documents and Capital Structure A small number of “insider” stockholders have significant influence over stockholder actions. As of January 31, 2025, our directors and executive officers beneficially owned an aggregate of 3,538,888 of our outstanding shares of common stock, which represents approximately 29% of the aggregate voting power of our outstanding shares of common stock.
All of the risks from the prior paragraph apply to the integration of BOIA including the risk that we could fail to integrate the customers to new products and services over time.
All of the risks from the risk factor entitled “ We may not be able to successfully integrate newly acquired businesses or other strategic relationships, such matters involve various risks, and we may not be able to fully realize the potential benefit of such opportunities” apply to ADA Site Compliance, including the risk that we could fail to integrate the customers to new products and services over time.
In addition, this concentration of ownership may delay or prevent a change in control of our company and make some future transactions more difficult or impossible without the support of our controlling stockholders. The interests of our controlling stockholders may not coincide with our interests or the interests of other stockholders.
In addition, this concentration of ownership may delay or prevent future transactions or a change in control of our company. 17 Table of Contents Provisions of our Certificate of Incorporation and bylaws could discourage potential acquisition proposals and could deter or prevent a change in control.
Any such issuances may also result in a reduction in the market price of our common stock. 16 Table of Contents The interests of our controlling stockholders may not coincide with yours and such controlling stockholders may make decisions with which you may disagree.
Any such issuances may also result in a reduction in the market price of our common stock. If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
Removed
As of December 31, 2023, we had $9.2 million in cash following a $7.0 million loan acquired in November 2023, which will become due in November 2026. Our business plan will require additional capital expenditures, and our capital outlays could increase substantially over the next several years as we implement our business plan.
Added
We may not be able to successfully integrate newly acquired businesses or other strategic relationships, such matters involve various risks, and we may not be able to fully realize the potential benefit of such opportunities.
Removed
We cannot assure you that infringement or invalidity claims (or claims for indemnification resulting from infringement claims) will not be asserted or prosecuted against us or that any such assertions or prosecutions will not materially adversely affect our business.
Added
If our business plan proves to be unsuccessful, our business may fail, and you may lose some or all of your investment. 8 Table of Contents We have experienced and will continue to experience competition as more companies seek to provide products and services similar to our products and services and seek to take advantage of changes in technologies.
Removed
More aggressive domestic or international regulation of the Internet may materially and adversely affect our business, financial condition, operating results, and future prospects.
Added
Risks Related to the Market for Our Common Stock Although our shares of common stock are listed on the Nasdaq Capital Market, historically we have had a limited trading volume and a higher price volatility. This may result in reduced liquidity of our common stock.
Removed
Our computer and communications systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses, physical or electronic break-ins, and similar events or disruptions.
Added
The interests of our controlling stockholders may not coincide with our interests or the interests of other stockholders.
Removed
We cannot assure you that we will be able to attract or retain such personnel. Our new technology platform may not function as expected or may not be accepted by our clients. In 2022, we completed the migration of all customers to our new platform for our digital accessibility product.
Removed
We cannot guarantee that our platform will continue to operate as expected or that our new platform will be fully accepted by our customers. If our new platform does not operate as expected or is not accepted, our ability to pursue and retain business may be damaged and our business and results of operations may be materially and adversely affected.
Removed
As of December 31, 2023, four of our stockholders, two of whom are our Executive Chairman and our Chief Executive Officer, and another of whom is a director, beneficially owned in the aggregate over 45% of the voting power of our outstanding shares of common stock.
Removed
As a result, these stockholders may be able to influence the outcome of matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
Removed
We currently have new research coverage by securities and industry analysts. If one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline.
Removed
Risks Relating to Our Charter Documents and Capital Structure We are close to being controlled by a small number of “insider” stockholders, which could determine corporate and stockholder action on significant matters.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe describe whether and how risks from identified cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “Security and privacy breaches, computer viruses, and cyber-attacks could harm our business, financial condition, results of operations, or reputation.” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K.
Biggest changeWe describe whether and how risks from identified cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “Security and privacy breaches, computer viruses, and cyber-attacks could harm our business, financial condition, results of operations, or reputation.” included as part of our risk factor disclosures at Item 1A of this Annual Report on Form 10-K. 18 Table of Contents Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of focus for our Board and management.
Incidents are evaluated to determine materiality as well as operational and business impact and reviewed for potential privacy impact. As part of the above processes, we have engaged external auditors and consultants to assess our internal cybersecurity programs and compliance with applicable practices and standards, and we are in the process of obtaining a SOC 2 Type II report.
Incidents are evaluated to determine materiality as well as operational and business impact and reviewed for potential privacy impact. As part of the above processes, we have engaged external auditors and consultants to assess our internal cybersecurity programs and compliance with applicable practices and standards and obtained a SOC 2 Type II report.
This team may include members from relevant departments such as Product Development, Information Technology, Finance, Legal, Marketing, 18 Table of Contents Client/Customer Services and Human Resources, any other relevant units or departments affected by the breach and any additional personnel as deemed necessary.
This team may include members from relevant departments such as Product Development, Information Technology, Finance, Legal, Marketing, Client/Customer Services and Human Resources, any other relevant units or departments affected by the breach and any additional personnel as deemed necessary.
Members of management that comprise our incident response team include the following officers (or those with similar responsibility): Senior Director of Information Technology, Vice President of Engineering, Chief Financial Officer, General Counsel, Customer Success (if customer data is affected), and Vice President of Human Resources (if employee data is affected).
Members of management that comprise our incident response team include the following officers (or those with similar responsibility): Senior Director of Information Technology, Chief Operating Officer, Chief Financial Officer, Customer Success (if customers are affected), and Vice President of Human Resources (if employee data is affected).
Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of focus for our Board and management. Our Audit Committee is responsible for the oversight of risks from cyber and data security threats. Members of the Board or Audit Committee receive periodic updates from senior management regarding our cybersecurity processes and risks.
Our Audit Committee is responsible for the oversight of risks from cyber and data security threats. Members of the Board or Audit Committee receive periodic updates from senior management regarding our cybersecurity processes and risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company also leases office space in Marietta, Georgia, Miami, Florida, and New York City, New York, and occupies shared office space in Portland, Oregon, Seattle, Washington, and Lehi, Utah, under membership agreements which provide for membership fees based on the number of contracted seats.
Biggest changeThe Company also leases office space in New York City, New York, and occupies shared office space in several locations under membership agreements which provide for membership fees based on the number of contracted seats.
Item 2. Properties The Company’s principal offices are located at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, consisting of approximately 627 square feet under a lease agreement that expires in October 2024.
Item 2. Properties The Company’s principal offices are located at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, consisting of approximately 627 square feet under a lease agreement that expires in October 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile these matters could materially affect operating results when resolved in future periods, management believes that, after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided for in the consolidated balance sheet as of December 31, 2023, would not be material to our financial position or annual results of operations.
Biggest changeWhile these matters could materially affect operating results when resolved in future periods, management believes that, after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided for in the consolidated balance sheet as of December 31, 2024, would not be material to our financial position or annual results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn January 31, 2024, there were 148 holders of record of our common stock, and a greater number of beneficial holders of our common stock for whom shares were held in a “nominee” or “street” name. 19 Table of Contents The following table sets forth information with respect to our repurchases of common stock during the three months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ ​ of Shares (or ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Value) that May ​ ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Yet Be Purchased ​ ​ Total Number of ​ Average Price ​ Announced Plans or ​ under the Plans or ​ Shares Purchased Paid per Share Programs Programs (2) October 1 - October 31: ​ ​ ​ ​ ​ ​ ​ Employee transactions (1) 3,438 ​ $ 4.99 — ​ $ — November 1 - November 30: ​ ​ ​ ​ ​ ​ Employee transactions (1) 8,675 ​ ​ 4.44 — ​ — December 1 - December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee transactions (1) ​ 8,983 ​ ​ 4.36 ​ — ​ ​ — Share repurchase program (2) ​ 248,205 ​ ​ 4.52 ​ — ​ ​ 3,878,000 Total: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee transactions (1) ​ 21,096 ​ $ 4.49 ​ — ​ $ — Share repurchase program (2) ​ 248,205 ​ $ 4.52 ​ — ​ $ 3,878,000 (1) Includes shares surrendered by employees to satisfy tax withholding obligations in connection with the settlement restricted stock units or the issuance of unrestricted shares of common stock.
Biggest changeThe following table sets forth information with respect to our repurchases of common stock during the three months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ ​ ​ of Shares (or ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Value) that May ​ ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Yet Be Purchased ​ ​ Total Number of ​ Average Price ​ Announced Plans or ​ under the Plans or ​ Shares Purchased Paid per Share Programs Programs (2) October 1 - October 31: ​ ​ ​ ​ ​ ​ ​ Employee transactions (1) 4,025 ​ $ 25.23 — ​ $ — November 1 - November 30: ​ ​ ​ ​ ​ ​ Employee transactions (1) 8,285 ​ ​ 27.55 — ​ — December 1 - December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee transactions (1) ​ 34,274 ​ ​ 19.39 ​ — ​ ​ — Total: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employee transactions (1) ​ 46,584 ​ $ 21.35 ​ — ​ $ — Share repurchase program (2) ​ — ​ $ — ​ — ​ $ 1,860,000 (1) Includes shares surrendered by employees to satisfy tax withholding obligations in connection with the settlement restricted stock units or the issuance of unrestricted shares of common stock.
(2) In November 2023, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $5 million of our common stock through December 31, 2025. Shares repurchased under the program are subsequently retired. The average price paid per share includes any broker commissions. The transfer agent of our common stock is Equiniti Trust Company.
(2) In November 2023, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $5 million of our common stock through December 31, 2025. Shares repurchased under the program are subsequently retired. The average price paid per share includes any broker commissions. In March 2025, this share repurchase program was terminated.
Its address is 1100 Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120-4100, and its telephone number is 1-800-468-9716. Dividend Policy Dividends to preferred stockholders take precedence over any dividends to common stockholders.
The transfer agent of our common stock is Equiniti Trust Company. Its address is 1100 Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120-4100, and its telephone number is 1-800-468-9716. Dividend Policy Dividends to preferred stockholders take precedence over any dividends to common stockholders.
Shares repurchased under the program are subsequently retired and restored to the status of authorized but unissued shares of common stock. As of December 31, 2023, we had $3.88 million remaining for the repurchase of shares.
Shares repurchased under the program are subsequently retired and restored to the status of authorized but unissued shares of common stock. As of December 31, 19 Table of Contents 2024, we had $1.86 million remaining for the repurchase of shares. In March 2025, this share repurchase program was terminated.
In June 2022, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $3 million of our common stock through June 30, 2024. Shares repurchased under the program were subsequently retired. In August 2023, the share repurchase program was terminated.
No shares were repurchased under this program between December 31, 2024 and the date it was terminated. In January 2025, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $12.5 million of our common stock through January 24, 2027.
Added
The program may be amended, suspended, or discontinued at any time and does not commit the Company to repurchase any shares of its common stock. No repurchases have been made under this program to date.
Added
On January 31, 2025, there were 144 holders of record of our common stock, and a greater number of beneficial holders of our common stock for whom shares were held in a “nominee” or “street” name.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, Change (in thousands) ​ 2023 2022 ​ $ % Interest income (expense), net ​ $ 93 ​ $ (4) ​ $ 97 ​ (2,425) % ​ For the year ended December 31, 2023, interest income, net consisted primarily of income from investment in money market funds, which was partially offset by interest on our term loan acquired in the fourth quarter of 2023.
Biggest changeThe increase in general and administrative expenses was due primarily to an increase in litigation expenses of $2.1 million, as well as increased stock compensation expense and transaction costs incurred in connection with the acquisition of ADA Site Compliance . 23 Table of Contents Interest Income (Expense) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, Change (in thousands) ​ 2024 2023 ​ $ % Interest income (expense), net ​ $ (864) ​ $ 93 ​ $ (957) ​ (1,029) % ​ For the year ended December 31, 2024 , interest expense, net consisted primarily of interest on our term loan borrowed in the fourth quarter of 2023, which was partially offset by interest income from investment in money market funds.
Acquired intangible assets are amortized on a straight-line basis over their estimated useful. ​ We also recognize the contingent consideration liability resulting from a business combination based on its fair value, which is determined both initially and in each reporting period preceding the end of the measurement period using the Monte-Carlo simulation model.
Acquired intangible assets are amortized on a straight-line basis over their estimated useful life. ​ We also recognize the contingent consideration liability resulting from a business combination based on its fair value, which is determined both initially and in each reporting period preceding the end of the measurement period using the Monte-Carlo simulation model.
This channel serves small & medium sized businesses that are on a partner or reseller’s web-hosting platform or that purchase our solutions from our 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 serves small and medium sized businesses that are on a partner or reseller’s web-hosting platform or that purchase our solutions from our Marketplace. The 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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes for the years ended December 31, 2023 and 2022 that appear elsewhere in this annual report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes for the years ended December 31, 2024 and 2023 that appear elsewhere in this annual report on Form 10-K.
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.
Factors that could cause or contribute to such differences include but are not 20 Table of Contents 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.
Both intangible assets and goodwill are evaluated periodically for impairment. ​ Refer to Note 2 - Significant Accounting Policies to our consolidated financial statements for a complete discussion of the significant accounting policies and methods used in the preparation of our consolidated financial statements, including our accounting policies related to stock-based compensation and intangible assets. ​ Item 7A.
Both intangible assets and goodwill are evaluated periodically for impairment. ​ Refer to Note 2 - Significant Accounting Policies to our consolidated financial statements for a complete discussion of the significant accounting policies and methods used in the preparation of our consolidated financial statements, including our accounting policies related to intangible assets. ​ Item 7A.
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the amounts 26 Table of Contents reported and disclosed in our consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates under different assumptions or conditions.
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates under different assumptions or conditions.
We define ARR as the sum of (i) for our Enterprise channel, the total of the annual recurring fee under each active contract at the date of determination, plus (ii) for our Partner and Marketplace channel, the monthly fee for all active customers at the date of determination, in each case, assuming no changes to the subscription, multiplied by 12.
We define ARR as the sum of (i) for our Enterprise channel, the total of the annualized recurring fee at the date of determination under each active contract, plus (ii) for our Partner and Marketplace channel, the annual or monthly recurring fee for all active customers at the date of determination, in each case, assuming no changes to the subscription, multiplied by 12 if applicable.
We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 17% of our revenue in each of the years ended December 31, 2023 and 2022. The Company continued to invest in Research and Development in 2023.
We had one major customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 15% and 17% of our revenue in the years ended December 31, 2024 and 2023, respectively. The Company continued to invest in research and development in 2024.
General and Administrative Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ December 31, ​ Change ​ (in thousands) ​ 2023 2022 ​ $ % General and administrative ​ $ 11,537 ​ $ 13,381 ​ $ (1,844) ​ (14) % ​ General and administrative expenses consist primarily of compensation and benefits related to our executives, directors and corporate support functions, general corporate expenses including legal fees, and occupancy costs.
General and Administrative Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ (in thousands) ​ 2024 2023 ​ $ % General and administrative ​ $ 13,585 ​ $ 11,537 ​ $ 2,048 ​ 18 % ​ General and administrative expenses consist primarily of compensation and benefits related to our executives, directors and corporate support functions, general corporate expenses including legal fees, occupancy and transaction costs.
Selling and Marketing Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, ​ Change ​ (in thousands) ​ 2023 2022 $ % Selling and marketing ​ $ 11,781 ​ $ 13,657 ​ $ (1,876) ​ (14) % ​ 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.
Selling and Marketing Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ (in thousands) ​ 2024 2023 $ % Selling and marketing ​ $ 12,668 ​ $ 11,781 ​ $ 887 ​ 8 % ​ 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.
Our results of operations in these periods are not necessarily indicative of the results which may be expected for any subsequent period.
The discussion of the results of our operations compares the year ended December 31, 2024 with the year ended December 31, 2023. Our results of operations in these periods are not necessarily indicative of the results which may be expected for any subsequent period.
The increase in gross profit was a result of increased revenue with a corresponding decrease to cost of revenue.
The increase in gross profit was a result of increased revenue.
Cost of Revenue and Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change (in thousands) ​ 2023 2022 $ % Revenue ​ $ 31,316 ​ $ 29,913 ​ $ 1,403 ​ 5 % Cost of revenue ​ (6,974) ​ (7,219) ​ 245 ​ (3) % Gross profit ​ $ 24,342 ​ $ 22,694 ​ $ 1,648 ​ 7 % ​ 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.
Cost of Revenue and Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ (in thousands) ​ 2024 2023 $ % Revenue ​ $ 35,201 ​ $ 31,316 ​ $ 3,885 ​ 12 % ​ Cost of Revenue ​ 7,261 ​ 6,974 ​ 287 ​ 4 % ​ Gross profit ​ $ 27,940 ​ $ 24,342 ​ $ 3,598 ​ 15 % ​ ​ 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. 22 Table of Contents For the year ended December 31, 2024, cost of revenue increased by 4% over the prior year.
As of December 31, 2023, we had $2.4 million in current contingent consideration liability recognized in connection with the acquisition of BOIA, and $7.0 million in noncurrent term loan which matures on November 30, 2026.
(“BOIA”) acquisition in full. 24 Table of Contents ​ As of December 31, 2024, we had $1.4 million in noncurrent contingent consideration liability recognized in connection with the acquisition of ADA Site Compliance, and $7.0 million in noncurrent term loan which matures on November 30, 2026.
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, 2023, research and development expenses increased by 15% over the prior year. This increase was driven by higher personnel cost.
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, 2024, R&D expenses decreased by 27% from the prior year.
For the year ended December 31, 2022, interest expense consisted of interest on our finance lease liabilities. Other Key Operating Metrics We consider annual recurring revenue (“ARR”) as a key operating metric and a key indicator of our overall business.
For the year ended December 31, 2023 , interest income, net consisted primarily of income from investment in money market funds. Other Key Operating Metrics We consider annual recurring revenue (“ARR”) as a key operating metric and a key indicator of our overall business.
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) ​ 2023 2022 Current assets ​ $ 14,776 ​ $ 12,966 Current liabilities ​ (11,529) ​ (11,062) Working capital ​ $ 3,247 ​ $ 1,904 ​ Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, (in thousands) ​ 2023 ​ 2022 Net cash provided by (used in) operating activities $ 318 $ (4,999) Net cash used in investing activities ​ (2,156) ​ (5,733) Net cash provided by (used in) financing activities ​ 4,170 ​ (1,330) Net increase (decrease) in cash ​ $ 2,332 ​ $ (12,062) ​ For the year ended December 31, 2023, in relation to the prior year, cash provided by operating activities increased primarily due to lower patent litigation costs and a reduction in sales and marketing costs, driven mainly by lower digital, consulting and third-party costs.
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. ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ December 31, 2024 December 31, 2023 ​ Current assets ​ $ 12,120 ​ $ 14,776 ​ Current liabilities ​ (11,571) ​ (11,529) ​ Working capital ​ $ 549 ​ $ 3,247 ​ ​ Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ (in thousands) 2024 2023 ​ Net cash provided by operating activities $ 2,731 ​ $ 318 ​ Net cash used in investing activities ​ (7,214) ​ (2,156) ​ Net cash provided by financing activities ​ 898 ​ 4,170 ​ Net increase (decrease) in cash and cash equivalents ​ $ (3,585) ​ $ 2,332 ​ ​ For the year ended December 31, 2024, in relation to the prior year, cash provided by operating activities increased primarily due to increased revenue and cost efficiencies associated with lower personnel expense following a realignment in our product and development teams .
Executive Overview AudioEye is an industry-leading digital accessibility platform 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.
Executive Overview AudioEye is an industry-leading digital accessibility platform delivering Americans with Disabilities Act (“ADA”) and WCAG compliance at scale. 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. In 2024, we continued to focus on product innovation, expanding revenue and managing expenses.
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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, ​ Change (in thousands) ​ 2023 ​ 2022 ​ $ ​ % Revenue $ 31,316 $ 29,913 $ 1,403 ​ 5 % Cost of revenue ​ (6,974) ​ (7,219) ​ 245 ​ (3) % Gross profit ​ 24,342 ​ 22,694 ​ 1,648 ​ 7 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling and marketing ​ 11,781 ​ 13,657 ​ (1,876) ​ (14) % Research and development ​ 6,989 ​ 6,085 ​ 904 ​ 15 % General and administrative ​ 11,537 ​ 13,381 ​ (1,844) ​ (14) % Total operating expenses ​ 30,307 ​ 33,123 ​ (2,816) ​ (9) % Operating loss ​ (5,965) ​ (10,429) ​ 4,464 ​ (43) % Interest income (expense), net ​ ​ 93 ​ ​ (4) ​ ​ 97 ​ (2,425) % Net loss ​ $ (5,872) ​ $ (10,433) ​ $ 4,561 ​ (44) % ​ 21 Table of Contents Revenue The following table presents our revenues disaggregated by sales channel: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, Change (in thousands) ​ 2023 ​ 2022 ​ $ ​ % Partner and Marketplace ​ $ 18,027 ​ $ 15,972 ​ $ 2,055 ​ 13 % Enterprise ​ 13,289 ​ 13,941 ​ (652) ​ (5) % Total revenues ​ $ 31,316 ​ $ 29,913 ​ $ 1,403 ​ 5 % ​ Partner and Marketplace channel consists of our CMS partners, platform & agency partners, authorized resellers and the Marketplace.
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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change (in thousands) 2024 2023 $ % ​ Revenue ​ $ 35,201 ​ $ 31,316 ​ $ 3,885 ​ 12 % Cost of revenue ​ 7,261 ​ 6,974 ​ 287 ​ 4 % Gross profit ​ 27,940 ​ 24,342 ​ 3,598 ​ 15 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling and marketing ​ 12,668 ​ 11,781 ​ 887 ​ 8 % Research and development ​ 5,077 ​ 6,989 ​ (1,912) ​ (27) % General and administrative ​ 13,585 ​ 11,537 ​ 2,048 ​ 18 % Total operating expenses ​ 31,330 ​ 30,307 ​ 1,023 ​ 3 % Operating loss ​ (3,390) ​ (5,965) ​ 2,575 ​ (43) % Interest income (expense), net ​ ​ (864) ​ ​ 93 ​ ​ (957) ​ (1,029) % Net loss ​ $ (4,254) ​ $ (5,872) ​ $ 1,618 ​ (28) % ​ Revenue The following table presents our revenues disaggregated by sales channel: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, Change (in thousands) 2024 ​ 2023 ​ $ ​ % Partner and Marketplace $ 20,249 ​ $ 18,027 ​ $ 2,222 ​ 12 % Enterprise 14,952 ​ 13,289 ​ 1,663 ​ 13 % Total revenue $ 35,201 ​ $ 31,316 ​ $ 3,885 ​ 12 % ​ The Partner and Marketplace channel consists of our CMS partners, platform & agency partners, authorized resellers and the Marketplace.
Results of Operations Our consolidated 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, 2023 with the year ended December 31, 2022.
We provide further commentary on our Results of Operation below. 21 Table of Contents Results of Operations Our consolidated 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”).
As of December 31, 2023, ARR was $31.2 million, which represents an increase of 7% year-over-year, driven by growth in our Partner and Marketplace channel.
As of December 31, 2024, ARR was $36.6 million, which represents an increase of 17% year-over-year, driven by growth in both our Partner and Marketplace channel and Enterprise channel . Liquidity and Capital Resources Working Capital As of December 31, 2024, we had $5.7 million in cash and cash equivalents, and working capital of $549,000.
For the year ended December 31, 2023, in relation to the prior year, cash used in investing activities decreased primarily due to the acquisition of BOIA in 2022, for which we paid $4.5 million, net of cash acquired and receipts associated with net working capital adjustments.
For the year ended December 31, 2024, in relation to the prior year, cash used in investing activities increased primarily due to the acquisition of ADA Site Compliance in 2024, for which we paid $5.3 million, net of cash acquired. Cash used for investing activities in 2023 related primarily to cash outlays for software development costs.
The critical accounting estimates discussed below are estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations.
The critical accounting estimates discussed below are estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations. ​ 25 Table of Contents Goodwill, Intangible Assets and Contingent Consideration recognized in connection with a Business Combination We recognize intangible assets acquired in connection with business combinations based on their fair value at acquisition, which is determined by management with the assistance a third-party valuation specialist.
For the year ended December 31, 2023, selling and marketing expenses decreased by 14% over the prior year.
For the year ended December 31, 2024, general and administrative expenses increased by 18% over the prior year.
As of December 31, 2023, Annual Recurring Revenue (“ARR”) was approximately $31.2 million, which represented an increase of 7% from December 31, 2022. Refer to Other Key Operating Metrics below for details on how we calculate ARR. As of December 31, 2023, AudioEye had approximately 110,000 customers, an increase from 86,000 customers at December 31, 2022.
For the year ended December 31, 2024, total revenue increased by 12% over the prior year. As of December 31, 2024, Annual Recurring Revenue (“ARR”) was approximately $36.6 million, which represented an increase of 17% from December 31, 2023. Refer to “Other Key Operating Metrics” below for details on how we calculate ARR.
We have no off-balance sheet arrangements, 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.
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.
This channel also includes federal, state and local government agencies. For the year ended December 31, 2023, total revenue increased by 5% over the prior year. The increase in Partner and Marketplace channel revenue was the result of continued expansion with existing partners and execution of new partnerships agreements in the period.
The increase in Partner and Marketplace channel revenue was the result of continued expansion with existing partners and the execution of new partnerships agreements in the year. The increase in Enterprise channel revenue was driven primarily by an increase in Enterprise customers .
AudioEye continues to focus on recurring revenue growth in both channels, while still offering our Website and Native Mobile App report services and PDF services that provide non-recurring revenue. For the year ended December 31, 2023, total revenue increased by 5% over the prior year.
We have two sales channels to deliver our product, the Partner and Marketplace channel and the Enterprise channel. AudioEye continues to focus on recurring revenue growth in both channels, while still offering our website and mobile application reporting services and PDF remediation services that provide non-recurring revenue.
On February 11, 2021, we entered into an At The Market (“ATM”) 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.
In the second quarter of 2024, the Company initiated an At The Market offering (“ATM offering”), under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $7.0 million from time to time.
For the year ended December 31, 2023, capitalized research and development cost increased by 68% over the prior year. The increase to capitalized research cost was the result of engineering personnel spending more time on product development than in previous comparable periods.
The decrease in capitalized R&D cost was the result of engineering personnel spending less time on product development than in previous comparable periods. Total R&D cost, which includes both R&D expenses and capitalized R&D costs, decreased 23% from 2023 to 2024.
The increase in customer count was driven by additions in the Partner and Marketplace channel. In the twelve months ended December 31, 2023, revenue from our Partner and Marketplace grew 13% from prior year comparable period. This channel represented about 60% of ARR at the end of December 2023.
This channel represented about 58% of ARR at the end of December 2024. In the twelve months ended December 31, 2024, total Enterprise revenue, inclusive of revenue from ADA Site Compliance acquired in September 2024, increased by 13% over the prior year. The Enterprise channel represented about 42% of ARR at the end of December 2024.
Total Research and Development cost, as defined under Research and Development section in the Results of Operations below, was 29% of total revenue in 2023. Total research and development cost increased primarily due to additional investments in engineering and product talent.
Total research and development cost, as defined under the “Research and Development” section in the “Results of Operations” below, was 19% of total revenue in 2024. Total research and development cost decreased from the prior year due to the completion of significant initiatives in research and development.
The decrease in selling and marketing expenses resulted primarily from a reduction in online media and third-party marketing expenses and a reduction to stock compensation expense which was partially offset by higher personnel costs. 22 Table of Contents Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ December 31, ​ Change ​ (in thousands) 2023 2022 $ % Research and development expense ​ $ 6,989 ​ $ 6,085 ​ $ 904 ​ 15 % Plus: Capitalized research and development cost ​ 1,946 ​ 1,160 ​ 786 ​ 68 % Total research and development cost ​ $ 8,935 ​ 7,245 ​ $ 1,690 ​ 23 % ​ 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.
Research and Development ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ Change ​ (in thousands) ​ 2024 2023 $ % Research and development expense ​ $ 5,077 ​ $ 6,989 ​ $ (1,912) ​ (27) % Plus: Capitalized research and development cost ​ 1,771 ​ 1,946 ​ (175) ​ (9) % Total research and development cost ​ $ 6,848 ​ 8,935 ​ $ (2,087) ​ (23) % ​ Research and development (“R&D”) expenses consist primarily of compensation and related benefits related to our employees involved in research and development activities.
For the year ended December 31, 2023, cost of revenue decreased by 3% over the prior year. The decrease in cost of revenue is primarily due to efficiencies achieved from infrastructure platform improvements and lower overhead costs from facilities. For the year ended December 31, 2023, gross profit increased by 7% over the prior year.
The increase in cost of revenue was primarily due to higher service delivery costs associated with increased revenue, amortization of our capitalized software development costs and additional costs attributable to ADA Site Compliance, which was acquired in September 2024. For the year ended December 31, 2024, gross profit increased by 15% over the prior year.
Removed
In 2023, we continued to focus on product innovation, expanding revenue and managing expenses. 20 Table of Contents We have two sales channels to deliver our product, the Partner and Marketplace channel and the Enterprise channel.
Added
As of December 31, 2024, AudioEye had approximately 127,000 customers, an increase from 110,000 customers at December 31, 2023. The increase in customer count is attributed to both our Partner and Marketplace and Enterprise channels. In the twelve months ended December 31, 2024, revenue from our Partner and Marketplace grew 12% over the prior year.
Removed
In the twelve months ended December 31, 2023, total Enterprise revenue, inclusive of revenue from the acquisition of BOIA in March 2022, decreased by 5% due to the reduction in revenue from one large customer. The Enterprise channel represented about 40% of ARR at the end of December 2023.
Added
In the twelve months ended December 31, 2024, both selling and marketing expense and general and administrative expense increased over the prior year. This increase in selling and marketing expense was due to additional costs associated with ADA Site Compliance, which was acquired in September 2024, as well as higher third-party marketing and stock compensation expenses .
Removed
With revenue for the twelve months ended 2023 increasing 5% from prior year comparable period, both Sales and Marketing expense and General and Administrative expense decreased from 2022. This decrease was mainly driven by efficiencies implemented during the year in these areas and lower stock compensation expense and litigation expense. We provide further commentary on our Results of Operation below.
Added
The increase in general and administrative expense was mainly driven by increases in litigation and stock compensation expenses, as well as transaction costs incurred in connection with the acquisition of ADA Site Compliance .
Removed
The decrease in Enterprise channel revenue was driven primarily by the reduction in revenue from one large customer.
Added
This channel also includes federal, state and local government agencies and revenue attributable to ADA Site Compliance, which was acquired in September 2024. For the year ended December 31, 2024, total revenue increased by 12% over the prior year.
Removed
Total research and development cost, which includes both R&D expenses and capitalized R&D costs, increased 23% from 2022 to 2023.
Added
For the year ended December 31, 2024, selling and marketing expenses increased by 8% over the prior year. The increase in selling and marketing expenses resulted primarily from additional cost associated with ADA Site Compliance, which was acquired in September 2024, as well as higher third-party marketing and stock compensation expense .
Removed
For the year ended December 31, 2023, general and administrative expenses decreased by 14% over the prior year. The decrease in general and administrative expenses was due primarily to lower legal expenses towards non-recurring litigation and lower stock compensation expense.
Added
This decrease was driven by l ower personnel cost associated with a realignment in our product and development teams following the completion of significant initiatives in R&D . For the year ended December 31, 2024, capitalized R&D cost decreased by 9% from the prior year.
Removed
This determination includes both annual and monthly contracts for recurring products. Some of our contracts are cancelable, which may impact future ARR. ARR excludes revenue from our PDF remediation services business, one-time Website and Mobile App report services business and other miscellaneous non- 23 Table of Contents recurring services.
Added
Recurring fees are defined as revenues expected to be generated from services typically offered as a subscription service or annual service offering such as our automation and platform, periodic auditing, human-assisted technological fixes, legal support and professional service offerings and other services that reoccur on a multi-year contract. This determination includes both annual and monthly contracts for recurring products.
Removed
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 and litigation-related expenses and other costs that are expected to be non-recurring.
Added
Some of our contracts are terminable prior to the expected term, which may impact future ARR.
Removed
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 consolidated financial statements presented on a GAAP basis in this Annual Report on Form 10-K with the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted earnings (loss) per diluted share.
Added
ARR excludes non-recurring fees, which are defined as revenue expected to be generated from services typically not offered as a subscription service or annual service offering such as our PDF remediation services business, one-time mobile application reports, and other miscellaneous services that are offered as non-subscription services or are expected to be one-time in nature.
Removed
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.
Added
The $2.7 million decrease in working capital in 2024 was primarily due to the acquisition of ADA Site Compliance, for which we made payments totaling $5.3 million in 2024, net of cash received.
Removed
We also provide a reconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation.
Added
In November 2023, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $5 million of our common stock through December 31, 2025. Shares repurchased under the program are subsequently retired and restored to the status of authorized but unissued shares of common stock.
Removed
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.
Added
In the twelve months ended December 31, 2024 , we paid $2.02 million in cash to repurchase 299,371 shares of our common stock. As of December 31, 2024 , we had $1.86 million remaining for the repurchase of shares. In March 2025, this share repurchase program was terminated.
Removed
Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings (Loss) per Diluted Share We define: (i) Adjusted EBITDA as net income (loss), plus (less) interest expense (income), plus depreciation and amortization expense, plus stock-based compensation expense, plus non-cash valuation adjustment to contingent consideration, plus certain litigation expense, plus certain acquisition expense, plus executive team restructuring cost, and plus loss on disposal or impairment of long-lived assets; (ii) Adjusted EBITDA margin as Adjusted EBITDA as a percentage of GAAP revenue; and (iii) Adjusted earnings (loss) per diluted share as net income (loss) per diluted common share, plus (less) interest expense (income), plus depreciation and amortization expense, plus stock-based compensation expense, plus non-cash valuation adjustment to contingent consideration, plus certain litigation expense, plus certain acquisition expense, plus executive team restructuring cost, and plus loss on disposal or impairment of long-lived assets, each on a per share basis.
Added
No shares were repurchased under this program between December 31, 2024 and the date it was terminated. In January 2025, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $12.5 million of our common stock through January 24, 2027.
Removed
Adjusted 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 an Adjusted loss per diluted share, as is the case for one of the periods presented in this Annual Report on Form 10-K.
Added
The program may be amended, suspended, or discontinued at any time and does not commit the Company to repurchase any shares of its common stock. No repurchases have been made under this program to date.
Removed
Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted 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.
Added
As of December 31, 2024, we had issued 292,746 shares of our common stock and raised $6,634,000, net of transaction expenses, utilizing the ATM offering in full. In the second quarter of 2024, we made a $2.4 million cash payment to settle the contingent consideration associated with the Bureau of Internet Accessibility Inc.
Removed
All of the items adjusted in the Adjusted EBITDA to net loss and the Adjusted earnings (loss) per share calculations are either recurring non-cash items, or items that management does not consider in assessing our on-going operating performance.
Added
As of March 12, 2025, we have no off-balance sheet arrangements, and we believe that the Company has sufficient liquidity to continue as a going concern through the next twelve months. We expect to continue to invest in our product and in sales and marketing to capture market demand.
Removed
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.
Added
In 2024, cash provided by operating activities totaled $2.7 million, and we were able to raise $6.6 million through an ATM offering, net of transaction costs. We expect cash provided by operating activities to continue to improve in 2025, driven mainly by the anticipated revenue growth.
Removed
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.
Added
For the year ended December 31, 2024, in relation to the prior year, cash provided by financing activities decreased due to an increase in payments related to settlement of employee stock-based awards and common stock repurchases, as well as higher payouts towards the contingent consideration in connection with the acquisition of BOIA.
Removed
Adjusted EBITDA 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.
Added
For the years ended December 31, 2024 and 2023, we raised $6.6 million and $6.9 million, respectively, through an ATM offering and a term loan, respectively, net of transaction costs.
Removed
Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted 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. 24 Table of Contents To properly and prudently evaluate our business, we encourage readers to review the consolidated 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.
Added
Quantitative and Qualitative Disclosures About Market Risk Not applicable. Item 8. Financial Statements and Supplementary Data Our Financial Statements begin on page F-1 of this Annual Report on Form 10-K and are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.
Removed
The following table sets forth reconciliations of Adjusted EBITDA to net loss, the most directly comparable GAAP-based measure, and Adjusted earnings (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) ​ 2023 2022 Adjusted EBITDA Reconciliation ​ ​ ​ ​ ​ Net loss (GAAP) ​ $ (5,872) ​ $ (10,433) ​ Non-cash valuation adjustment to contingent consideration ​ 442 ​ 346 ​ Interest (income) expense, net ​ (93) ​ 4 ​ Stock-based compensation expense ​ 3,698 ​ 4,566 ​ Acquisition expense (1) ​ — ​ 247 ​ Litigation expense (2) ​ ​ 415 ​ ​ 1,916 ​ Executive team restructuring cost (3) ​ ​ 247 ​ ​ 246 ​ Depreciation and amortization ​ ​ 2,268 ​ ​ 2,111 ​ Loss on disposal or impairment of long-lived assets ​ ​ 235 ​ ​ 51 ​ Adjusted EBITDA ​ $ 1,340 ​ $ (946) ​ Adjusted EBITDA margin (4) ​ ​ 4 % ​ (3) % ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Earnings (Loss) per Diluted Share Reconciliation ​ ​ ​ ​ ​ Net loss per common share (GAAP) — diluted ​ $ (0.50) ​ $ (0.91) ​ Non-cash valuation adjustment to contingent consideration ​ 0.04 ​ 0.03 ​ Interest (income) expense, net ​ (0.01) ​ — ​ Stock-based compensation expense ​ 0.31 ​ 0.40 ​ Acquisition expense (1) ​ — ​ 0.02 ​ Litigation expense (2) ​ ​ 0.04 ​ ​ 0.17 ​ Executive team restructuring cost (3) ​ ​ 0.02 ​ ​ 0.02 ​ Depreciation and amortization ​ ​ 0.19 ​ ​ 0.18 ​ Loss on disposal or impairment of long-lived assets ​ ​ 0.02 ​ ​ — ​ Adjusted earnings (loss) per diluted share (5) ​ $ 0.11 ​ $ (0.08) ​ Diluted weighted average shares (GAAP) ​ 11,766 ​ 11,477 ​ Includable incremental shares (Non-GAAP) (5) ​ ​ 338 ​ ​ — ​ Adjusted diluted shares (Non-GAAP) (6) ​ ​ 12,104 ​ ​ 11,477 ​ (1) Represents legal and accounting fees associated with the BOIA acquisition.
Removed
(2) Represents legal expenses related primarily to non-recurring litigation pursued by the Company. (3) Represents severance expense associated with the restructuring in executive roles. (4) Net loss as a percentage of GAAP revenues, which is the GAAP-based measure most comparable to Adjusted EBITDA margin, was (19)% and (35)%, respectively, for the years ended December 31, 2023 and 2022.
Removed
Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of GAAP revenue. (5) Adjusted earnings per adjusted diluted share for our common stock is computed using the treasury stock method.
Removed
(6) 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 net loss and a negative Adjusted EBITDA. 25 Table of Contents Liquidity and Capital Resources Working Capital As of December 31, 2023, we had $9.2 million in cash and working capital of $3.2 million.
Removed
The increase in working capital in 2023 was primarily due to our $7 million term loan acquired in the fourth quarter of 2023, and was partially offset by the $1.4 million increase in current liability associated with the contingent consideration relating to the BOIA earn-out as the final payment is expected to be settled in the second quarter of 2024.

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