Business Context and Reporting Period
Company: AudioEye, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 12, 2013
Event: Termination of a Material Definitive Agreement (Royalty Agreement) with CMG Holdings Group, Inc. ("CMGO").
Key Financial Metrics
This filing does not report standard financial statements (revenue, profit, cash flow, or margins). The only specific financial figure disclosed is a one-time settlement payment of $85,000 made by AudioEye to CMGO to terminate the Royalty Agreement.
Material Changes and Agreement Details
- Termination: On November 12, 2013, AudioEye terminated the Royalty Agreement originally signed on August 15, 2012.
- Settlement Cost: The termination required a one-time payment of $85,000 from AudioEye to CMGO.
- Previous Obligation: The terminated agreement required AudioEye to pay CMGO 10% of cash received from patent enforcement and licensing settlements for five years, net of direct costs and taxes.
- Remaining Obligations: A separate Services Agreement dated August 15, 2012, remains in effect. Under this agreement, CMGO is entitled to a 7.5% commission on revenues procured by CMGO and a 10% commission on net revenues from a specified customer.
- Current Status of Services Agreement: As of the filing date, no commission has been earned by CMGO or is payable by AudioEye under the Services Agreement.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, management commentary on future performance, or specific risk factors beyond the details of the terminated and active agreements. The primary contingency noted is the ongoing potential liability under the Services Agreement, though no amounts are currently due.
Investor Verification Checklist
- Verify the impact of the $85,000 settlement payment on the company's current cash position.
- Confirm the specific terms of the remaining Services Agreement to understand future commission liabilities.
- Review subsequent filings to determine if any commissions have become payable under the Services Agreement.
- Assess the company's current patent enforcement strategy now that the royalty obligation to CMGO has been removed.