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Why would anyone buy shares of a company where approximately 86% of all fiscal year 2014 revenues could be considered “Barter” revenues? A company whose largest shareholders voluntarily sold the entire company for just $1M to a penny stock company in 2010 and which is now trading at a staggering almost 25X ttm revenue or a fully diluted $50M market capitalization on the heels of share count being up over 100% in the last 12 months and with management paying themselves well over a million dollars a year in cash compensation while almost all of their revenues were non cash? Can’t say you weren’t warned. The recent article, "AudioEye, when things aren't what they seem" laid it out pretty clearly.
BARTER Revenues
"Strong reasons exist for rejecting permissibility of barter transactions as revenue. This paper argues that barter is a poorly measurable, imprudently and carelessly considered management practice that can produce deterioration in the revenue generating cycle. If a seller accepted bartered goods or services and reported this as revenue because it wants to use assets to exchange for a future good or service, receiving payment in anything else similar in fair value other than what is realizable in the money of account and claims to it, the circumstances of the barter exchange breach the earnings cycle for the unforeseeable future. Based on that, barter transactions have failed the revenue test, while also perhaps failing the arms length, arms’ length, fair value assumption on which the public reporting model is based.
The use of and reporting barter transactions as revenue promotes a management notion that it can engage in commerce while ineffectively pricing and, in turn, charging others for the goods and services it provides, meanwhile disserving its stakeholders and non management shareholders. Including barter in revenue further promotes the notion that management can avoid establishing optimal pricing for its goods and services, yet desiring to engage in a commercial environment that functions on cash and readily exchangeable equivalents.
Including barter transactions in revenue fails to complete the revenue cycle with respect to realized-realizable. It is inferior for measurement purposes and fails to produce cash on which the company and employees rely for operating activity and remuneration purposes. Employees, nonmanagement shareholders, and stakeholders of such enterprises are finding that the flawed pricing and costing practices of businesses do not contribute to society in the meaningful way the stakeholders desire. The result becomes a progressive moral hazard, with associated market scams that enrich a few insiders, while fleecing the ordinary investor and the less powerful stakeholders.
When barter reporting issuers participate in the equity markets, as under the deceit of ‘new economy’ companies, their shares tend to attract (pirate) market ownership at the expense of other listed issuers and investors who own shares in more substantial companies that have been harmed partly resulting from the ‘new economy’ propaganda. NASD, NYSE, and the other organized exchanges should not list companies that attempt to sustain themselves by using market liquidity schemes. Such practices should provide a red flag to regulators. To attempt to erode the reporting model, however, so as to give the appearance that such companies are earning sufficient revenue to sustain their operations is a larceny to the ordinary investor, as well as a commercial failure. When virtually the entire dotcom sector practiced barter, the deceit rises to the level of a grand scale fraud to satisfy the self-dealing and self- enrichment interests of a few managements; private equity and venture capital investors, and investment bankers who are looking to cash out in a ‘take-the-money-and-run’, pump-and-dump scheme.
Financial statements under the barter scenario are too subjective for comparison and leaving the company shareholder lawsuits. Use of such practices, and expecting the reporting model to contort accordingly, also presumes that the market is either efficient and the share price of a barter user accurately reflects the company’s worth, or inefficient -- to give them an advantage -- with the latter being more true as market players during the bubble bought anything whether or not management reported GAAP and the stock buyer knew that. Management practicing barter as part of its revenue model assumed the markets were inefficient and opaque because in disingenuously reporting its status, it felt the ‘investor’ would think more highly of their stock and buy it. Meanwhile, there was no logic to most equity buying during the Bubble; management could have reported anything and people still would have bought (shares).
The FASB should end the debate with an effective definition for revenue recognition that excludes from the reporting model barter transactions as components in revenue. Users of accounting statements are looking at far more craven frauds within accrual accounting, where the reporting model itself deceives the user on the true status of the publicly traded enterprise, similar to the dotcoms and Enron using common shares sales to generate cash flow for operating, and as collateral for off-balance sheet activity practiced during, and simultaneously producing the bubble.
As a result, we should reject the use of barter in the revenue recognition model and keep high the 'bar' (that is, the quality of revenue and the recognition and quality of financial reporting). Any method used to report barter revenue permits a lowering of the reporting bar."
Bearish on AEYE
TARGET $.10
AudioEye..."When Things Aren't What They Seem"
Many would beg to differ with you on that. If it makes any move higher thanks to again being promoted, I would strongly encourage you or anyone else to sell into it. This company in my opinion is worth at best 15 cents which is 15X what they themselves thought it worth in 2010 when they sold it to CMGO.
Over 100m shares now issued and still just $2m in real cash revenues for the entire last year. Trading at over 25Xs ttm revenues and still losing money.
Just look into what happened to shareholders at the chairman's last two companies. Both bankrupt with shareholders losing it all. Maybe third time is a charm but I wouldn't bet my money on it.
I have no idea who wrote that online and didn't know who Paul Lyons was until I looked him up. Looks like a decent guy to me. I personally don't agree with its author but found it in the public domain and thought some might find it of interest. Hard to know the authors motivation. I provided the link, maybe someone can respond and ask what prompted their comment to begin with.
You guys are smart enough to see the article for what it is. Notice how the disclaimer was buried in the last line? I think the first author got it right while the second is more interested in trying to possibly unload a large position their fund may have bought in the recent 40 cent financing which brought the now share count to over 106M shares. Remember what it was when the spin out originally happened? Some might consider taking advantage of any calculated attempts to create price appreciation and liquidity because those like possibly that articles author, may be using it for exactly the same, their own exit. A little common sense can go a long way. Only my opinion, no different than some others here who saw the same upon review.
Apparently Paul Arena and Nathaniel Bradley's last company called Hipcricket today filed bankruptcy. Appears to be two in a row for Arena according to others in a different forum. Apparently there was a company called Geos prior to it. Surprisingly, it looks like the company below had actual real revenues versus predominately non cash revenues like their current company Audioeye.
Augme Restructuring, Focusing On HipCricket
by Mark Walsh, September 21, 2012, 3:47 PMRecommend (1)CommentAfter going on an acquisition spree in the last year, Augme Technologies, the parent of mobile marketing and ad services firm HipCricket, is retrenching. The company on Fridayannounced a restructuring effort aimed at reducing operating expenses by $6 million on an annualized basis."Our goal is to minimize Augme's cash burn, while carefully investing our resources and protecting our strategic assets, which are the foundation of Hipcricket's leadership position in the mobile marketing and mobile advertising industry," stated interim CEO Robert F. Hussey.
He said the immediate focus would be on reducing headcount, slowing the pace of the company’s intellectual property investments and cutting all “excess variable expense items.”Augme did not specify the scope of the cuts, and a company spokesperson declined to provide further details.The restructuring comes on the heels of board member Hussey stepping in as interim CEO on Tuesday, replacing Paul Arena, who remains on the Augme board.
The company said in a release that Hussey, who has previously served as interim COO at Augme, would be better suited to leading its next phase of growth.As part of the recent management shakeup, the company also brought on former Ogilvy & Mather executive Tom DeLuca as COO last week.Today’s cost-cutting announcement didn’t help boost Augme’s share price, which was trading down about 6% to $1.15 on Friday afternoon in the over-the-counter market.Augme has grown rapidly since 2011 through a series of acquisitions, including HipCricket, bought in August 2011 for $44.5 million, barcode technology firm Jagtag (for $5.5 million in July 2011), and all the common and preferred stock of Geos Communications IP Holdings in May.
The company last year also snapped up AdLife, a self-serve platform for managing and optimizing mobile campaigns.According to the company’s financial report for its first quarter ending May 31, its selling, general and administrative expenses were $9.2 million -- more than double the $4.6 million in the year-earlier period. “The increase in expenses is primarily related to additional headcount and other increased activities resulting from the acquisition of Hipcricket and organic growth,” the company stated in its filing.At the same time, revenue for the quarter was only $5.2 million, up from $1.2 million a year ago. Its net loss was $7.6 million compared to $4 million a year ago.Earlier this month, Augme said it expects to report revenue of $6.1 million to $6.3 million for its second quarter ended August 31. It also stated that the value of signed contracts for the quarter was $18.9 million, up 9% from $17.4 million the prior quarter. It did not provide any guidance on net income (or loss) when it reports results on October 10.
The turmoil at Augme reflects the challenges mobile marketing companies face as public companies. Newly public companies like mobile ad network Millennial Media and mobile marketing firm Velti are rapidly growing, but still unprofitable. Mobile data services provider Motricity has undergone its own restructuring in the last year, but is still losing money and trading at under $1.For its part, Augme is now clearly focusing on HipCricket as the core of its operations. The unit offers a range of mobile marketing services and technologies for powering SMS and QR code campaigns, rich media and video advertising, and loyalty programs. It boasts having run some 200,000 campaigns to date for clients including Macy's, MillerCoors, Nestle, Clear Channel.
HipCricket, which has relocated its headquarters to New York, where Augme is based, had grown to 150 employees from 100 at the time of the acquisition last year, according to an Xconomy report earlier this month.In addition to its financial difficulties, Augme is also fighting on the legal front. It has initiated patent litigation against several companies including AOL, Yahoo, Millennial and Velti. The company has reported a patent portfolio covering areas including content delivery and targeting, voice advertising in mobile, and VoIP.
"Things aren't always what they seem; the first appearance deceives many; the intelligence of a few perceives what has been carefully hidden."
Perhaps less naive and gullible investors are finally starting to understand the reality behind this company? Amazed it has taken so long, it was all right in filings the entire time. "Misleading" hard to argue with him.
There was so much more he could have touched on including what happened at the two last companies the now chairman of Audioeye ran, not limited to an SEC investigation supposedly for certain public statements made that some would argue lead to the shares being grossly overvalued. In fact, there is still an on going shareholder lawsuit naming him personally. The last company many on this management team where involved with today is trading at a penny with rumors of bankruptcy possibly pending.
"Smoke and Mirrors" interesting choice of words. You talk about the OTC way, I would disagree. I personally have never encountered any company, regardless of exchange, that accounts for an exchange with a client of a service or license as revenues. Haven't seen anything like it since the dot.com era and ad swaps aimed at overstating revenues to drive higher valuations. Can you, or anyone else here, name a single other company who out of all their reported revenues, approx only 16% of all of them involved actual cash trading hands?
"On a sequential basis, revenue for the third quarter of 2014 increased 61% when compared with revenue of $3,013,033 in the second quarter of 2014.The Company's annualized revenue "run rate" in the third quarter of 2014 approximated $19.3 million."
That was from their Q3 press release. Note how today's conveniently ignored and omitted mention of sequential growth and a run rate. Of course because revenues fell sequentially about 33% and current run rate would be now just $13 million, a large decline from.previously reported.
Think about this for a second, out of the entire $12M of approximate revenues they will report, approximately $1.9M or just approx 16% of all of it involves a customer actually paying them with real cash. Almost approx. $10.1M of their revenues is from the exchange of a license involving no actual money trading hands.
Current fully diluted valuation is a staggering $50M plus which is better than 25Xs trailing cash sales. At some point the bubble bursts imo. I'm amazed it has held air this long.
Notice how they conveniently omitted from the press release that revenues, even including non monetary license exchanges that generate no cash, fell almost 33% in Q4 when compared to Q3.
No not at this time.
Yes but revenues dropping almost 33% from last quarter is not a good thing and they only generated $1M in real cash revenues? Did I read that correct? And for profits, again you can thank their creative accounting for that false perception. A true profit means you make money, real cash, above and beyond what you spend and they have never done that despite the multiple prs that can only be considered somewhat misleading to most and only valid per accounting rules that allowed them to count almost 35 license swaps as revenues. I think good old Jim Ennis got one thing right and that's the valuation he paid for AudioEye. He and CMGO paid a measly million dollars plus or minus for the entire company. They knew what it was worth when they bought it and I personally don't see where it's worth much more than that today with its still insignificant amount of real cash revenues. CMGO paid $1m and today through press releases, what appears to be some blatant stock promotion and leveraging a rarely used tax accounting treatment for license exchanges claiming it as revenue, they have created an almost $50M fully diluted market cap. God bless...I wonder how all those who bought above a $1 feel and if they would claim they were mislead? I known what I will be doing if we again see a concerted effort to push the shares higher. Based on today's pr and tape action, it appears as though someone is again back at it. ;) AudioEye is still something I just don't see. Just my opinions which rely on filings and history versus the company's continual stream of what I perceive as conveniently selective and self serving press releases. About time for the old gang to show up here I would assume.
Isn't it interesting how the company chooses to put in their releases only those comparisons that help them?
Again...devil is in the details.
On a quarterly sequential basis, revenues fell almost 33% in Q4 by my math. They did just $3.25M compared to $4.8M in Q3. REVENUES DROPPED Q OVER Q.
I expected news and more to come. Some of the past posters may even reappear. Remember, the investors who just bought in have a 40 cent cost basis and need some excitement and liquidity if they want to sell all of those recently issued almost 7M shares.
If you research the past here, none of this should be any surprise. I won't be surprised if another great short opportunity will again present itself just like last time. Wash...rinse...repeat.
.301 trades...someone is voting their opinion by selling their shares. If I owned shares, I would be doing the exact same.
I'm amazed they were able to convince any investors to put more money in, basically throwing good money after bad in my opinion. Another $2.6M in cash resulting in yet more dilution just confirms they were yet again out of money. It's likely not going to buy them more than an extra quarter if lucky. If and when this stock is trading at new lows in the future, anyone who read the financials and who understands the difference between real cash revenues and non monetary revenues should not be surprised. I see this financing and dilution as little more than trying to put a band aid on a gaping wound. It will be interesting to see if the promotion soon again starts. Going to need some excitement and liquidity for all those news shares to be able to sell into. Wash...rinse...repeat.
Many of the posters who posted here were not by chance. They are all well on to other deals and don't think that any of them care about the damage or harm they've done to many that listened and acted on their less than objective commentary.
Yes they were but I would assume they were being compensated for their bullish sentiment. Remember, the company issued a staggering almost 1.6M shares to consultants in just the last two quarters. Same last two quarters where their revenues were 97% and 87% non monetary. Just last quarter alone, they burned about $4M in cash and at quarter end, had only about $2M in cash left. I have to assume they are currently again low on cash which could lead to more dilution and fully diluted is already close to 100m shares. Remember the share count when we first got the divi shares? Fraction of what it is now.
You do have to give them credit. Thanks to their unique non monetary license revenue recognition strategy enabled by just a single one time cash license sale to some unnamed customer, they've created an investor perception of large growth that some would argue differs significantly from reality and has lead to a valuation far in excess of what it most likely ever would have been absent it. Truth is that cash revenues for the 9 month period were barely up to just $777k ytd. Meanwhile the company has an almost $60M fully diluted valuation. I don't expect it to last much longer expecting the shares to inevitably challenge old lows probably making new ones. Just my humble opinion.
Interesting how almost all of their last 3 Q's revenues, approx. 66.66% / 96% and 87% respectively, are all non monetary coming from trading a license.
Meanwhile and telling in my opinion, their bonuses being awarded because of those very non monetary revenues appear to be paid in cash if I'm correct?
Perhaps what is good for the goose, is not so good for the gander?
This fund manager made these comments back in January. Based on cash revenues being basically flat year over year at only $777k, it's hard to not agree with him. Don't forget that Hipcricket's former chairman and CEO was none other than Paul Arena, now AudioEye's chairman.
"AudioEye Is Something I Just Don't See
A fellow private investor recently asked me if I had ever heard of AudioEye (AEYE). This company promises to leverage legal changes that encourage broader access to communications technology for people with disabilities. I'm not convinced that this company has much of a business case.Let's start with what federal law requires. The FCC describes how the Twenty-First Century Communications and Video Accessibility Actwill change how telecom carriers and equipment manufacturers configure their equipment and services.
It does not appear to me to be some kind of broad mandate for every website hosted in the United States, or any website anywhere that can reach an American audience. The American Foundation for the Blind notes in its review of this law how it will benefit the disabled, mainly by enabling them to translate messages. Any company staking a claim to enormous growth in automated audio translation for all websites is, to put it mildly, overly optimistic.
The AudioEye investor relations page tells us about the company's executive team. I can honestly say that I have never ever seen a publicly traded tech company put its management bios on an IR page. Here's what Startup Tucson had to say about AudioEye in an undated article from 2013. The CEO divided his time between this company and other ventures which have since merged: Augme Technologies and Hipcricket. Hipcricket looks like another mobile CRM platform. Good luck competing against Salesforce. Hipcricket has problems of its own. It reported a net loss for the quarter ending November 30, 2013. Reviewing the quarterly income history for HIPP at Yahoo Finance reveals quarterly losses since 2012. Yeah, some track record.
CMG Holdings bought AudioEye in 2010. CMG tried to reposition AudioEye to reach the health care sector in 2011. It then spun off AudioEye in 2012 while retaining some ownership. I have always understood spinoffs to result from successful restructurings or the disposal of a non-core asset. CMG Holdings' actions with AudioEye make no strategic sense to me.
Read AudioEye's latest 10-Q from November 1, 2013. They still have a working capital deficit. They only had $73K in cash on hand for the quarter ending September 30. Their net loss for that quarter was -$870K, more than twice the size of their quarterly loss from the same quarter in 2012. Look at their 8-K for December 26, 2013. That private placement generated almost 12M new warrants which, if exercised, will significantly dilute the 44.5M shares currently outstanding. AudioEye could sure use some real groundbreaking web development innovator to help it figure out its strategy.
Alas, I can find no public indications that a guru on the scale ofGoDaddy founder Bob Parsons or some other such leading light is behind AudioEye. I hostAlfidi Capital on GoDaddy and no one from that company has ever informed me that my site must suddenly use new technology to become compliant with a federal law for the disabled. It sure looks like AudioEye registered one of its domains through GoDaddy using an email address resembling the CEO's name.
I did find AudioEye mentioned on a few websites known for touting penny stocks. AEYE trades in penny territory as of today, at about 34 cents a share. The company wants the blind to see the Web but I can't see it ever helping my portfolio, and the pun on "seeing" is intended.
Full disclosure: No position in AEYE, ever."
Yes of course they are. Is that what your friend "Nate" advised you?
Of course Hammer. Why would anyone think to the contrary? Ironically, it would appear both you and another recent poster here speak directly with "Nate", better known as Ceo Nathaniel Bradley. I think it's great that you both are able to reach out to him to get things "clearified" when things may be fuzzy for you.
I also appreciate your insistence that all your info comes from the company's public filings. Along those lines, can you please point me to the company's filings where they reference these events that you indicated to be unfolding back on Oct 20?
"HEARING SOME EVENTS UNFOLDING THAT IS ON TAP TO TAKE THIS BACK OVER $1+++++++.......Hammer"
Also, I can't locate the statement in their filings where they said they qualify for a Nasdaq listing and were going to uplist? Sure that came from only the filings?
Thanks in advance for your reply, I know you are working hard on SNET so I appreciate you taking the time here.
Of course, no brainer. How could it not be?
Having said that, I found this comment on another board. While not the author and I do not agree with his scam comment, it would appear he may not have gotten the same memo you did from "Nate" as you call him. Any thoughts on his DD? For that matter, besides you talking to the Ceo, what other DD are you suggesting you did that you could share with all of us?
"Just finished looking at the PR for the quarterly results, and based on the headline, it seemed like everything was going great for the company. Then I started to do some digging. What I found was disturbing: #1) Cash flow from ops negative despite "net income" for 9 months ended 09/30/14: "From Q3 2014 10Q: In view of our working capital position, continuing operating losses and limited cash, we will be required to raise additional capital through the sale of equity or debt securities or borrowings from financial institutions or third parties or a combination of the foregoing to continue to fund operations. " They're not even close to cash-flow positive at this point. So IMO the statement re: net income is very misleading. #2) In the past 12 months, the outstanding basic shares have increased 38% and the diluted share count has increased by 59%, but the actual cash balance has only increased by about $300,000. #3) Revenues: of the $4,837,411 in Q3 revenues, $4,275,000 were "non-monetary" from license swapping. For the 9 months ending Sept 30th, 2014, of the $8,883,330 in revenues, $8,100,000 were "non-monetary" revenues, "Non-monetary" means license swapping and prepaid services. Not sure if prepaid services are lap dances at the local strip club or what, but the reality is that at best, only 10% of the company's revenues are "cash" (i.e. "real") revenues. This is how companies not generating revenues or profits finesse the earnings to make it appear they're growing when they're not. #4) Management team: past is littered with failed companies and questionable (some would call them "pump and dump" tactics) (see Augme Technoloies, now HipCricket or GEOS) The bottom line to me is that this appears to be a struggling, cash-burning scam company run by a CEO and a Chairman with unsuccessful (at best) or shady (at worst) pasts. The phrase "a fool and his money are soon parted" seems particularly appropriate in this case. Stay far away from this one..."
270,500 shares on the offer. Any thoughts Hammer? More of those warrant holders?
Thanks Hammer. I did listen to the call but many of my questions were not answered. Since you are the one telling us how great of a buy it is here and how you talk to the Ceo personally, I would appreciate your response to my questions. Also, who do you think they are issuing all those consulting shares to? What services are they providing? Looks like almost 1.7m shares issued in just the last 2 quarters. Again, what are you looking for in terms of additional potential dilution, if any? Please also expand on how you know warrant holders are selling and why they are selling? Do these sellers know something we don't?
Sounds good Hammer. Can you explain how a company doing only $777k in YTD cash revenues and not qualifying under any of Nasdaq's qualification standards intends to uplist? Also, what are your thoughts on the non monetary revenue reporting and does the newly filed Form D indicate to you that more dilution is coming? Does last quarters approx $4M cash burn concern you? Last, is your buddy Bradley giving you any more good non public info lately? You indicated you spoke to him previously.
Importantly, why would any warrant holders be selling here? Aren't many of the warrant holders close to the company and those who probably know more than most? Why are they selling if they thought the shares eventually going higher. Might they know something we don't?
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?TabIndex=2&FilingID=10292840&companyid=708206&ppu=%252fdefault.aspx%253fcik%253d1362190
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10301642-856-25554&type=sect&TabIndex=2&companyid=708206&ppu=%252fdefault.aspx%253fcik%253d1362190
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
FORM D
OMB APPROVAL
OMB Number: 3235-0076
Estimated Average burden hours per response: 4.0
Notice of Exempt Offering of Securities
1. Issuer's Identity
CIK (Filer ID Number)
Previous Name(s) x None
Entity Type
0001362190
x Corporation
o Limited Partnership
o Limited Liability Company
o General Partnership
o Business Trust
o Other
Name of Issuer
AUDIOEYE INC
Jurisdiction of Incorporation/Organization
DELAWARE
Year of Incorporation/Organization
x
Over Five Years Ago
o
Within Last Five Years (Specify Year)
o
Yet to Be Formed
2. Principal Place of Business and Contact Information
Name of Issuer
AUDIOEYE INC
Street Address 1
Street Address 2
5210 E. WILLIAMS CIRCLE
FIFTH FLOOR
City
State/Province/Country
ZIP/Postal Code
Phone No. of Issuer
TUCSON
ARIZONA
85711
866-331-5324
3. Related Persons
Last Name
First Name
Middle Name
Bradley
Nathaniel
T.
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
x
Executive Officer
x
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Crawford
James
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
x
Executive Officer
o
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Bradley
Sean
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
x
Executive Officer
o
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Potamianos
Constantine
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
x
Executive Officer
o
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
O'Donnell
Edward
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
x
Executive Officer
o
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Purcell
Ernest
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
o
Executive Officer
x
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Bettis
Carr
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
o
Executive Officer
x
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Withrow, III
Edward
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
o
Executive Officer
x
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Arena
Paul
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
x
Executive Officer
x
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Coelho
Anthony
Street Address 1
Street Address 2
5210 E. Williams Circle, Fifth Floor
City
State/Province/Country
ZIP/Postal Code
Tucson
ARIZONA
85711
Relationship:
o
Executive Officer
x
Director
o
Promoter
Clarification of Response (if Necessary)
Last Name
First Name
Middle Name
Mellon, II
Matthew
New S8 filing for 5M more shares as part of the 2015 incentive compensation plan.
Reality check…Cash Revenues for 9 months $777,955 vs. $748,693
Almost NO GROWTH in real cash revenues. Notice how the press release no longer mentions “non monetary” revenues. They’ve now termed their monetary revs as “SaaS and development revenue” and non monetary ones as intellectual property ("IP") licensing revenue. Creative! Maybe everyone will look the other way…doubt it. May be legal but to me it’s reminiscent of the guy who hides the balls under the cups and makes you guess which one it’s under, always taking your money.
“SaaS and development revenue for the three months ended September 30, 2014 totaled $561,286, which represented a 47% increase when compared with similar revenue of $381,539 in the third quarter of 2013. On a sequential basis, intellectual property ("IP") licensing revenue totaled $4,275,000 in the third quarter of 2014, for an increase of 46% when compared with IP revenue of $2,925,000 in the second quarter of 2014."
Ignore the press release, it was just as expected. Takes a lot of chutzpah issuing that press release. Read the filing, the real devil is in the details.
Looks like they also burned about $4m in just last Q and their real cash revenues weren’t even the $600k they previously announced they would be. Gave away another 600k shares in the Q and Oct for “services”. That’s on top of the almost 1.1M last Q. The market isn’t stupid. Problem is with the huge growth they are reporting, sophisticated investors are now taking a harder look to see just how they’re doing it and can’t possibly like what they’re finding, that is the other side of the sword.
Reality is that they sold a single license back in Q1 to “someone” for $225,000 cash which they used as the determinant of fair value for the other subsequent 35 exchanges of them with customers. Each time they have traded a license, again for no real money, they are recognizing $225,000 in revenues. Legal per certain accounting standards, but that doesn’t make it good business practice and many would argue it paints a horribly inaccurate picture of the company’s actual business and financial strength and possibly grossly over inflating the stock price. The exchanges generate no real money and never will. Won’t pay salaries, pay the rent or produce a penny in actual cash profits.
Bottom line, in my opinion a business that has around 87% of their revenues involve NO CASH trading hands and who burns roughly $4M a quarter is solely dependent on issuing more shares to survive and is simply not sustainable in current form and most certainly not deserving of a fully diluted valuation of approximately $67M.
We all saw this news the first time they announced it back on Sept 22 if I recall correctly.
Any clue if the university paid anything of substance in real cash or is this yet more non monetary revenues like the the 97% of them in Q2 and 87% in Q3?
Maybe this was a favor called in by board member Tony Coelho? Good guy according to many.
"He has also endowed a chair in Public Policy at the University of Merced"
Nice that the university is taking steps toward complying with Section 508 since the deadline was back in June of 2001.
Information on Section 508 of the Rehabilitation Act
The Law: Section 508
In 1998, Congress amended the Rehabilitation Act and strengthened provisions covering access to information in the Federal sector. As amended, section 508 of the Rehabilitation Act requires access to the Federal government’s electronic and information technology. The law covers all types of electronic and information technology in the Federal sector and is not limited to assistive technologies used by people with disabilities. It applies to all Federal agencies when they develop, procure, maintain, or use such technology. Federal agencies must ensure that this technology is accessible to employees and the public to the extent it does not pose an "undue burden." The law directs the Access Board to develop access standards for this technology that will become part of the Federal procurement regulations. The Electronic and Information Technology Accessibility Standards were released on December 21, 2000. The deadline for 508 compliance was June 21, 2001.
Excellent! Some of us have some questions we may be asking. I can't wait to hear them explain how they would justify a company that has only generated about $1M in real cash revenues year to date through 3 quarters being valued at an approximate $65M fully diluted valuation?
Why despite all the press releases stating huge revenue growth, the truth of the matter is that YTD, of the full almost $8.7M in soon to be reported revenues, did only approximately just $1M of it involve a customer actually paying you with real money?
Approximations
Q1=66.6% non monetary revenues
Q2=97% non monetary revenues
Q3=87% non monetary revenues
Still love to know who the single customer was that bought a license for cash in Q1 that allowed for the subsequent accounting treatment of all the other license exchanges with customers to be also recognized as revenues. Should be a good call. ;)
If you can't trust the messenger, can you trust the message?
Just remember, those who learn nothing from the past are doomed to repeat it.
Loose lips sink ships...some never learn.
When you have almost a $65M market cap and only around just $1M in actual cash revenues through 3 quarters, you have to do something to try and sustain it because the fundamentals certainly don't in my opinion. You have to do creative things, like possibly issue almost 1.1 million shares for certain services in just Q2, or exchanging licenses with customers and recording it as non monetary revenues. Heck you might even go on a road show with the guys at BTIG to SF on Monday, Chicago yesterday and NY today.
Interesting find on Bernie Kossar and Paul Arena. Bernie was just added to the AudioEye advisory board today. Previously added to Augme Technologies advisory board in 2010 and previously involved with I2 Telecom. Check the historical performance of both for reference.
http://www.marketwired.com/press-release/Bernie-Kossar-Joins-Augme-Technologies-Advisory-Board-1295175.htm
Interesting assertions made by the plaintiff. I don’t know whether they were found to have any merit or what the cases disposition was. Just found the document an interesting read.
http://www.scefiling.org/filingdocs/5717/10862/22605e_DemurrerxRJNxExhibitxA1.pdf
Then there's this one from someone here at Ihub. Again, not commenting or endorsing, simply pointing it out.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52669308
Just Google Paul Arena and Bernie Kossar. It's all there to see.
Marty first published that on July 17, close to 2 months ago. In fact, if you look at the chart, it appears to have been it which helped cause the stock to begin its rise from around .30 to in excess of $1. May be a lot of investors buried at much higher prices thanks to him.
Hard for me to imagine any reputable financial professional missing, or ignoring the fact that about 66.6% of Q1 revenues were non monetary, followed by roughly 97% of Q2, and now about 87% of Q3.
Correct me if mistaken but I believe in their last 3 quarters, of the approximate $9M in YTD reported revenues, only slightly better than $1M involves a customer paying with actual cash.
"On July 17, a website called Wall Street Daily published an article written by Marty Biancuzzo in which he discusses the position of Audioeye Inc"
I'd love to hear a more current and recent update from Marty, especially in light of what appears to be a pretty material omission in his analysis. Even the company itself has recently felt the need recently to better distinguish between monetary and non monetary revenues in its own communications.
Well they did issue almost 1.1M shares just in Q2 alone for "services". It would be interesting to know who and what they did to earn that many shares in just a single quarter.
Did you see their release yesterday...What's the old saying...more things change, the more they stay the same?
AudioEye to Report Profitable Third Quarter on Record Revenue of Approximately $4.7 Million
Deja Vu! “Cross-license related revenue in the most recent quarter amounted to approximately $4.1 million and cash-related revenue approximated $600,000”
So once again, devil is in the details. At least they mentioned it in the actual release this time. Reality is that once again, approximately 87% of all revenues in Q3 are again non monetary, customers paid just $600k of the total $4.7M. Everything else is again coming from the exchange of a license.
AudioEye and Virtual World Computing Enter Into Licensing Agreements Valued Over $1 Million to Develop and Distribute Collaborative Technologies"
In other words, we exchanged a license with them for no cash consideration, it's all more non monetary revenues, just like 97% of all last quarters revenues, but we're going to account for it as $1M in revenues?
Correct me if I'm wrong, but based on my interpretation of this and the other 97% of Q2 revenues, they don't even generate enough cash to cover the cost of the press release announcing them?
From Hotstocked, "it should be noted that the company's report states that $2.9 million of the quarter's revenue is 'nonmonetary'. This is explained further down in the report. The licenses sold and recorded as revenue were 'exchanged' with customers for 'either a licenses to their intellectual property or prepaid services' (sic).