AudioEye Inc.
10/26/2026 | Press release | Distributed by Public on 10/26/2026 15:12
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with our consolidated financial statements and related notes in Part I, Item 1 of this report.
As used in this quarterly report, the terms "we," "us," "our" and similar references refer to AudioEye, Inc., unless otherwise indicated.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, you may be able to identify forward-looking statements by terms such as "may," "should," "will," "forecasts," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "projects," "potential" or "continue," the negative of these terms and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements, and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and speak only as of the date on which they are made.
Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors discussed in "Part I, Item 1A. Risk Factors" contained in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Risk factors that could cause actual results to differ from those contained in the forward-looking statements include but are not limited to risks related to:
| ● | the uncertain market acceptance of our existing and future products; |
| ● | our need for, and the availability of, additional capital in the future to fund our operations and the development of new products; |
| ● | the success, timing and financial consequences of new strategic relationships, acquisitions or licensing agreements we may enter into; |
| ● | rapid changes in internet-based applications that may affect the utility and commercial viability of our products; |
| ● | the timing and magnitude of expenditures we may incur in connection with our ongoing product development activities; |
| ● | judicial applications of accessibility laws to the internet; |
| ● | the level of competition from our existing competitors and from new competitors in our marketplace; and |
| ● | the regulatory environment for our products and services. |
Readers of this report are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date they are made, and we expressly disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent SEC filings. This cautionary note is applicable to all forward-looking statements contained in this report.
AudioEye Solutions
At its core, AudioEye's offering provides ongoing testing, automated fixes, and 24/7 monitoring that continually improves conformance with Web Content Accessibility Guidelines ("WCAG"). 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. AudioEye also offers additional solutions to provide for enhanced compliance and accessibility, including periodic auditing, custom fixes by experts, 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. We also offer PDF remediation services, as well as website and mobile application reporting services, including Voluntary Product Accessibility Template (VPAT) audits, to help our customers with their digital accessibility needs.
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-five (25) issued patents in the United States and three (3) pending U.S. 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.
Our Annual Report filed on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 12, 2026 provides additional information about our business and operations.
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 the three months ended September 30, 2026, we continued to focus on product innovation and expanding revenue.
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 one-time website and mobile application reporting services as well as PDF remediation services that provide non-recurring revenue.
In the three months ended September 30, 2026, total revenue increased by 7% over the prior year comparable period. As of September 30, 2026, Annual Recurring Revenue ("ARR") was approximately $43.3 million, which represented an increase of 12% year-over-year. Refer to "Other Key Operating Metrics" below for details on how we calculate ARR.
As of September 30, 2026, AudioEye had approximately 130,000 customers, a 6% increase from 123,000 customers at September 30, 2025. The increase in customer count was attributable to an increase in both our Partner and Marketplace channel customers and our Enterprise channel customers.
In the three months ended September 30, 2026, revenue from our Partner and Marketplace channel grew 14% over the prior year comparable period, primarily due to continued expansion with existing partners. The Partner and Marketplace channel represented about 59% of ARR as of September 30, 2026. In the three months ended September 30, 2026, total Enterprise channel revenue decreased 1% from the prior year comparable period, primarily due to a reduction in non-recurring revenue. The Enterprise channel represented about 41% of ARR as of September 30, 2026.
We had two customers (including, for each such customer, the customer's affiliates) which accounted for 11% and 12% of our total revenue, respectively, or 23% in aggregate, in the three months ended September 30, 2026. One customer accounted for 13% of our total revenue in the nine months ended September 30, 2026.
The Company continued to invest in research and development in the third quarter of 2026. Total research and development cost, as defined under the "Research and Development Expenses" section in the "Results of Operations" below, was 12% of total revenue in the three months ended September 30, 2026. In the three months ended September 30, 2026, research and development expenses decreased
from the prior year comparable period primarily due to a reduction in employee headcount as a result of efficiency gains from newly implemented AI tools and automation.
In the three months ended September 30, 2026, selling and marketing expenses decreased from the prior year comparable period. The decrease in selling and marketing expenses was mainly driven by a reduction in marketing personnel resulting from efficiencies gained with the implementation of AI tools and automation.
In the three months ended September 30, 2026, general and administrative expenses increased from the prior year comparable period. The increase in general and administrative expenses was due primarily to higher personnel costs, partially offset by lower litigation expenses.
We provide further commentary on our Results of Operations below.
Results of Operations
Our unaudited 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 three and nine months ended September 30, 2026 with the three and nine months ended September 30, 2025.
Our results of operations in these interim periods are not necessarily indicative of the results which may be expected for any subsequent period. Due to rounding, numbers presented throughout this document may not add precisely to the totals provided and percentages may not precisely reflect the absolute figures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Revenue |
|
$ |
10,963 |
|
$ |
10,227 |
|
$ |
736 |
|
7 |
% |
|
Cost of revenue |
|
1,871 |
|
|
2,312 |
|
|
(441) |
|
(19) |
% |
|
|
Gross profit |
|
9,092 |
|
|
7,915 |
|
|
1,177 |
|
15 |
% |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
3,304 |
|
|
3,649 |
|
|
(345) |
|
(9) |
% |
|
|
Research and development |
|
889 |
|
|
1,118 |
|
|
(229) |
|
(20) |
% |
|
|
General and administrative |
|
3,644 |
|
|
3,506 |
|
|
138 |
|
4 |
% |
|
|
Change in fair value of contingent consideration |
|
- |
|
|
(40) |
|
|
40 |
|
(100) |
% |
|
|
Total operating expenses |
|
7,837 |
|
|
8,233 |
|
|
(396) |
|
(5) |
% |
|
|
Operating income (loss) |
|
1,255 |
|
|
(318) |
|
|
1,573 |
|
495 |
% |
|
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(265) |
|
|
(236) |
|
|
(29) |
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
990 |
|
$ |
(554) |
|
$ |
1,544 |
|
279 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
|
|||
|
Revenue |
|
$ |
32,232 |
|
$ |
29,817 |
|
$ |
2,415 |
|
8 |
% |
|
Cost of revenue |
|
6,439 |
|
6,545 |
|
(106) |
|
(2) |
% |
|||
|
Gross profit |
|
25,793 |
|
23,272 |
|
2,521 |
|
11 |
% |
|||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
|
Selling and marketing |
|
10,806 |
|
11,169 |
|
(363) |
|
(3) |
% |
|||
|
Research and development |
|
2,848 |
|
3,471 |
|
(623) |
|
(18) |
% |
|||
|
General and administrative |
|
13,365 |
|
10,998 |
|
2,367 |
|
22 |
% |
|||
|
Change in fair value of contingent consideration |
|
- |
|
(1,350) |
|
1,350 |
|
(100) |
% |
|||
|
Total operating expenses |
|
27,019 |
|
24,288 |
|
2,731 |
|
11 |
% |
|||
|
Operating loss |
|
(1,226) |
|
(1,016) |
|
(210) |
|
21 |
% |
|||
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(763) |
|
|
(709) |
|
|
(54) |
|
8 |
% |
|
Loss on extinguishment of debt |
|
|
- |
|
|
(300) |
|
|
300 |
|
(100) |
% |
|
Total other expense |
|
|
(763) |
|
|
(1,009) |
|
|
246 |
|
(24) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,989) |
|
$ |
(2,025) |
|
$ |
36 |
|
(2) |
% |
Revenue
The following tables present our revenues disaggregated by sales channel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
2026 |
|
2025 |
|
$ |
|
% |
|
||||
|
Partner and Marketplace |
|
$ |
6,380 |
|
$ |
5,582 |
|
$ |
798 |
|
14 |
% |
|
Enterprise |
|
4,583 |
|
|
4,645 |
|
|
(62) |
|
(1) |
% |
|
|
Total revenues |
|
$ |
10,963 |
|
$ |
10,227 |
|
$ |
736 |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Partner and Marketplace |
|
$ |
18,595 |
|
$ |
16,501 |
|
$ |
2,094 |
|
13 |
% |
|
Enterprise |
|
13,637 |
|
13,316 |
|
321 |
|
2 |
% |
|||
|
Total revenue |
|
$ |
32,232 |
|
$ |
29,817 |
|
$ |
2,415 |
|
8 |
% |
The Partner and Marketplace channel consists of our Content Management System ("CMS") partners, platform & agency partners, authorized resellers and the Marketplace. This channel serves small and medium sized businesses that are on a partner or reseller's web-hosting platform or that purchase 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. This channel also includes federal, state and local government agencies.
For the three and nine months ended September 30, 2026, total revenue increased by 7% and 8%, respectively, over the prior year comparable periods. The 14% and 13% increases in Partner and Marketplace channel revenue for the three and nine months ended September 30, 2026, respectively, were primarily due to continued expansion with existing partners.
For the three months ended September 30, 2026, Enterprise channel revenue decreased by 1% from the prior year comparable period, primarily due to a reduction in non-recurring revenue. For the nine months ended September 30, 2026, Enterprise channel revenue increased by 2% over the prior year comparable period, driven primarily by the growth in recurring revenue resulting from new customer relationships.
Cost of Revenue and Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Revenue |
|
$ |
10,963 |
|
$ |
10,227 |
|
$ |
736 |
|
7 |
% |
|
Cost of Revenue |
|
1,871 |
|
|
2,312 |
|
|
(441) |
|
(19) |
% |
|
|
Gross profit |
|
$ |
9,092 |
|
$ |
7,915 |
|
$ |
1,177 |
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
|
2026 |
|
2025 |
|
$ |
|
% |
|||
|
Revenue |
|
$ |
32,232 |
|
$ |
29,817 |
|
$ |
2,415 |
|
8 |
% |
|
Cost of revenue |
|
6,439 |
|
6,545 |
|
(106) |
|
(2) |
% |
|||
|
Gross profit |
|
$ |
25,793 |
|
$ |
23,272 |
|
$ |
2,521 |
|
11 |
% |
Cost of revenue consists primarily of compensation and related benefits costs for our service delivery team, as well as a portion of our technology operations team that supports the delivery of our services, fees paid to our managed hosting and other third-party service providers, amortization of capitalized software development costs and patent costs, and allocated overhead costs.
For the three and nine months ended September 30, 2026, cost of revenue decreased by 19% and 2%, respectively, from the prior year comparable periods. The decrease in cost of revenue for the three months ended September 30, 2026 was primarily due to reductions in fulfillment costs and in employee headcount as a result of operational efficiencies. The decrease in cost of revenue for the nine months ended September 30, 2026 was primarily due to a reduction in employee headcount as a result of operational efficiencies.
For the three and nine months ended September 30, 2026, gross profit increased by 15% and 11%, respectively, over the prior year comparable periods. The increases in gross profit were primarily a result of increased revenue attributed to new customers and to the continued expansion with existing partners.
Selling and Marketing Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Selling and marketing |
|
$ |
3,304 |
|
$ |
3,649 |
|
$ |
(345) |
|
(9) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
|
|||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Selling and marketing |
|
$ |
10,806 |
|
$ |
11,169 |
|
$ |
(363) |
|
(3) |
% |
Selling and marketing expenses consist primarily of compensation and benefits related to our sales and marketing staff, as well as third-party advertising and marketing expenses.
For the three and nine months ended September 30, 2026, selling and marketing expenses decreased by 9% and 3%, respectively, from the prior year comparable periods. The decreases in selling and marketing expenses were primarily due to a reduction in marketing personnel resulting from efficiencies gained with the implementation of AI tools and automation. The decrease in selling and marketing expenses for the nine months ended September 30, 2026 was partially offset by an increase in third-party marketing expenses.
Research and Development Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Research and development expense |
|
$ |
889 |
|
$ |
1,118 |
|
$ |
(229) |
|
(20) |
% |
|
Plus: Capitalized research and development cost |
|
411 |
|
|
452 |
|
|
(41) |
|
(9) |
% |
|
|
Total research and development cost |
|
$ |
1,300 |
|
$ |
1,570 |
|
$ |
(270) |
|
(17) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
|
|||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Research and development expense |
|
$ |
2,848 |
|
$ |
3,471 |
|
$ |
(623) |
|
(18) |
% |
|
Plus: Capitalized research and development cost |
|
1,265 |
|
1,430 |
|
(165) |
|
(12) |
% |
|||
|
Total research and development cost |
|
$ |
4,113 |
|
$ |
4,901 |
|
$ |
(788) |
|
(16) |
% |
Research and development ("R&D") expenses consist primarily of compensation and related benefits, independent contractor costs, and an allocated portion of general overhead costs related to our employees involved in research and development activities. Total research and development cost includes the amount of research and development expense reported within operating expenses as well as research and development cost that was capitalized during the fiscal period.
For the three and nine months ended September 30, 2026, R&D expenses decreased by 20% and 18%, respectively, from the prior year comparable periods. The decreases were primarily driven by a reduction in employee headcount as a result of efficiency gains from newly implemented AI tools and automation. For the three and nine months ended September 30, 2026, capitalized R&D cost decreased by 9% and 12%, respectively, from the prior year comparable periods primarily due to a reduction in engineering personnel. For the three and nine months ended September 30, 2026, total R&D cost, which includes both R&D expenses and capitalized R&D costs, decreased by 17% and 16%, respectively, from the prior year comparable periods.
General and Administrative Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
|
|||
|
General and administrative |
|
$ |
3,644 |
|
$ |
3,506 |
|
$ |
138 |
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
|
|||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
General and administrative |
|
$ |
13,365 |
|
$ |
10,998 |
|
$ |
2,367 |
|
22 |
% |
General and administrative expenses consist primarily of compensation and benefits related to our executives, directors and corporate support functions, and general corporate expenses including legal fees, occupancy and transaction costs.
For the three and nine months ended September 30, 2026, general and administrative expenses increased by 4% and 22%, respectively, over the prior year comparable periods. For the three months ended September 30, 2026, the increase in general and administrative expenses was due primarily to higher personnel costs, partially offset by lower litigation expenses. For the nine months ended September 30, 2026, the increase in general and administrative expenses was due primarily to increases in litigation and in stock compensation expense.
Change in Fair Value of Contingent Consideration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
|
|||
|
Change in fair value of contingent consideration |
|
$ |
- |
|
$ |
(40) |
|
$ |
40 |
|
(100) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
|
|||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Change in fair value of contingent consideration |
|
$ |
- |
|
$ |
(1,350) |
|
$ |
1,350 |
|
(100) |
% |
Change in fair value of contingent consideration consists of non-cash valuation adjustments to contingent consideration liabilities recognized in connection with the acquisition of ADA Site Compliance, which was accounted for as a business combination. The earnout targets for ADA Site Compliance were measured as of December 31, 2025, and there will be no further changes to the fair value of this contingent consideration.
For the three and nine months ended September 30, 2026, no change in fair value of contingent consideration was recorded in earnings.
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Interest expense, net |
|
$ |
(265) |
|
$ |
(236) |
|
$ |
(29) |
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Interest expense, net |
|
$ |
(763) |
|
$ |
(709) |
|
$ |
(54) |
|
8 |
% |
Interest expense, net consists primarily of interest on our term loan, offset by interest income from investment in money market funds.
For the three and nine months ended September 30, 2026, interest expense, net increased by 12% and 8%, respectively, from the prior year comparable periods. The increases in interest expense were attributable to the increase in outstanding principal balance on our term loan, as we drew the remaining $3.6 million in subsequent term loan advances in the first quarter of 2026.
Loss on Extinguishment of Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Change |
||||||||
|
(in thousands) |
|
2026 |
|
2025 |
|
$ |
|
% |
||||
|
Loss on extinguishment of debt |
|
$ |
- |
|
$ |
(300) |
|
$ |
300 |
|
(100) |
% |
On March 31, 2025, upon entering into a new credit facility with Western Alliance Bank, the Company paid the full $7.0 million in outstanding principal on its previous term loan with SG Credit Partners. In the three months ended March 31, 2025, in connection with the termination of the SG Credit Partners term loan, we recognized a $300,000 loss on extinguishment of debt, which included prepayment and other fees and the unamortized portion of related debt discount and debt issuance costs. No loss on extinguishment of debt was incurred in the three and nine months ended September 30, 2026.
Other Key Operating Metrics
We consider annual recurring revenue ("ARR") as a key operating metric and a key indicator of our overall business. We also use ARR as one of the primary methods for planning and forecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against such expectations.
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. 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. Some of our contracts are terminable prior to the expected term, which may impact future ARR. 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 website and mobile application reports, and other miscellaneous services that are offered as non-subscription services or are expected to be one-time in nature. As of September 30, 2026, ARR was $43.3 million, which represents an increase of 12% year-over-year, driven by growth in both our Partner and Marketplace channel and our Enterprise channel.
Liquidity and Capital Resources
Working Capital
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|
|
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|
|
|
|
|
|
(in thousands) |
|
September 30, 2026 |
|
December 31, 2025 |
|
||
|
Current assets |
|
$ |
15,977 |
|
$ |
12,622 |
|
|
Current liabilities |
|
(12,999) |
|
(14,416) |
|
||
|
Working capital (deficit) |
|
$ |
2,978 |
|
$ |
(1,794) |
|
As of September 30, 2026, we had $9.3 million in cash and cash equivalents and working capital of $3.0 million. The $4.8 million increase in working capital in the nine months ended September 30, 2026 was primarily due to our $3.6 million draw of the remaining subsequent term loan advances available to the Company.
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 (the "2025 Program"). In the nine months ended September 30, 2026, we used $475,000 of the 2025 Program to repurchase shares. As of September 30, 2026, we had $7.45 million remaining for the repurchase of shares under the 2025 Program. In October 2026, the Board of Directors adopted a new program to repurchase up to $15.0 million of our outstanding shares of common stock through October 18, 2027. This program replaced the 2025 Program, which the Board of Directors terminated in connection with the approval of the new program. The new program may be amended, suspended, or discontinued at any time and does not commit the Company to repurchase any shares of its common stock. Shares repurchased under any repurchase program are subsequently retired and restored to the status of authorized but unissued shares of common stock.
As of September 30, 2026, we had $16.6 million in principal outstanding under the term loan, $15.7 million of which is classified as a noncurrent liability. The term loan matures on March 31, 2030, and requires quarterly principal payments which began on April 10, 2026. Refer to Note 3 - Debt to our consolidated financial statements for additional information regarding our credit facility. As of September 30, 2026, we were in compliance with all covenants under the credit facility. In October 2026, the Company entered into a Fifth Loan Modification Agreement with the Lender, which amended certain restrictions on permitted stock repurchases under the Credit Facility Agreement. See Part II, Item 5. "Other Information" for additional information regarding the Fifth Loan Modification Agreement.
As of October 26, 2026, we had 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. 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.
Cash Flows
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|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
||||
|
(in thousands) |
|
2026 |
|
2025 |
|
||
|
Net cash provided by operating activities |
|
$ |
4,035 |
|
$ |
2,220 |
|
|
Net cash used in investing activities |
|
(1,753) |
|
(3,527) |
|
||
|
Net cash provided by financing activities |
|
1,757 |
|
206 |
|
||
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
4,039 |
|
$ |
(1,101) |
|
For the nine months ended September 30, 2026, in relation to the prior year comparable period, cash provided by operating activities increased primarily due to an increase in customer collections and a decrease in personnel cost resulting from a reduction in headcount.
For the nine months ended September 30, 2026, in relation to the prior year comparable period, cash used in investing activities decreased primarily due to a reduction in the current year period in payments associated with acquisitions.
For the nine months ended September 30, 2026, in relation to the prior year comparable period, cash provided by financing activities increased primarily due to a reduction in repurchases of common stock and lower payments related to settlement of employee share-based awards, partially offset by lower net proceeds from credit facility activity. In the nine months ended September 30, 2026 and 2025, we received $3.6 million and $13.4 million, respectively, in proceeds from term loan borrowings under the credit facility with Western Alliance Bank. In the first quarter of 2025, we used a portion of the term loan borrowings to repay our previous $7.0 million term loan, as well as costs associated with the issuance and termination of our previous credit facility.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States. 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.
Our critical accounting estimates, as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, relate to contingent consideration recognized in connection with business combinations and asset acquisitions. There have been no material changes to our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
AudioEye Inc. published this content on October 26, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 26, 2026 at 21:12 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]