Business Context and Reporting Period
Company: AudioEye, Inc. (AEYE)
Filing Type: Form 8-K (Current Report)
Date of Report: February 11, 2021
Reporting Period: Preliminary unaudited financial results for the quarter and full year ended December 31, 2020.
Key Financial Metrics
The following metrics represent preliminary estimated ranges for the periods ended December 31, 2020, unless otherwise noted.
| Metric | Q4 2020 (Estimated) | Full Year 2020 (Estimated) |
|---|---|---|
| Revenue | $5.5M - $5.6M | $20.4M - $20.5M |
| Net Loss (GAAP) | ($3.2M) - ($2.9M) | ($7.4M) - ($7.1M) |
| Non-GAAP Earnings (Loss) | ($1.1M) - ($0.8M) | ($2.8M) - ($2.6M) |
| Gross Margin | 72% - 73% | N/A |
| Cash on Hand | $9.1M (as of Dec 31, 2020) | N/A |
| Monthly Recurring Revenue (MRR) | $1.9M (as of Dec 31, 2020) | N/A |
Debt and Liquidity: The filing does not provide specific debt figures or liquidity ratios beyond the cash on hand balance of approximately $9.1 million.
Material Changes and Agreements
- At Market Issuance Sales Agreement: On February 11, 2021, the Company entered into an agreement with B. Riley Securities, Inc. to sell up to $30,000,000 of common stock via an "at the market" offering.
- Compensation: The Agent will receive a commission of up to 3% of gross sales proceeds. The Company will reimburse the Agent for expenses up to $40,000 initially, plus up to $5,000 quarterly for ongoing diligence.
- Financial Performance: The Company reported a net loss for both the quarter and full year, though Non-GAAP losses were significantly lower due to the exclusion of share-based compensation and other non-cash items.
Guidance, Outlook, and Risks
Management Commentary: Management utilizes Non-GAAP measures to evaluate performance, excluding non-cash valuation adjustments, interest expense, share-based compensation, and certain severance expenses. The filing includes a reconciliation of GAAP to Non-GAAP results.
Risks and Contingencies:
- Preliminary Data: Results are unaudited and preliminary; final results filed with the SEC may vary significantly.
- Forward-Looking Statements: Future performance is subject to risks and uncertainties, including potential amplification from the COVID-19 outbreak.
- Severance: Non-GAAP adjustments include severance expenses related to the relocation of the technology center to Portland, Oregon.
Investor Verification Checklist
- Verify the final audited financial results for Q4 and FY 2020 when the 10-K is filed, as current figures are preliminary estimates.
- Monitor the execution of the $30 million At Market Issuance Sales Agreement and the resulting dilution to existing shareholders.
- Review the specific impact of share-based compensation on the difference between GAAP and Non-GAAP losses.
- Confirm the status of the technology center relocation to Portland and any associated ongoing costs.