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By Boyan Angelov
Sep 02, 2014

AudioEye, Inc. (AEYE) Regains Lost Ground

After a turbulent couple of weeks on the stock market, AudioEye, Inc. (AEYE) managed to get back on the right track and ended the trading week at $0.70. AEYE's recent success came about after the company's participation at the Midwest IDEAS Investor Conference, held in Chicago, IL on August 26.

The venture's CEO Mr. Nathaniel Bradley and executive chairman Mr. Paul Arena were announced to make a presentation at the event. The news about AEYE's participation at the conference was what initially got a measure of interest around the company when it came out in a press release on August 18.AEYE_chart.png

Further news on AEYE from August 26 was the announced employment of former baseball player Mr. Robbie Dromerhauser as senior managing director. Mr. Dromerhauser has worked for companies focused on humanitarian causes in the past and is the founder of such an organization called Pitch For a Cure.

Looking past the recent news and publicity around AEYE, there comes the evaluation of the company's financial state. The recently submitted 10-Q for the period ended June 30, 2014 contains the following:

  • Cash: $514,1 thousand
  • Total current assets: $4,2 million
  • Total current liabilities: $1,3 million
  • Revenue: $3 million
  • Net income: $1 million

AEYE reported its growth in revenue and its high net income in advance on Friday, August 8 in a press release. Although there was initial excitement when the news came out, the day the official filing was submitted registered a decline for AEYE.

To see the cause for this, we can take a more in depth look into the report. As disclosed by the company on page 8, AEYE closed on a third private placement on June 30. The venture sold an aggregate of 2,7 million units to three accredited investors for proceeds of $830 thousand. The units consisted of 2,7 million common stock shares and warrants for the purchase of an additional 2,7 million shares of common stock.

AEYE_logo.pngThe warrants AEYE sold have an exercise price of $0.40 per share. With the current price standing at $0.70, this raises the risk of dilution significantly. Another issue related to dilution can be outlined when comparing the amounts of common stock. In the same page of the report, AEYE listed that as of June 30 the company had 59,2 million common stock shares issued and outstanding. The venture's OTC markets profile page lists 69,3 million in O/S as of August 11, the same date when the Q2 was submitted. This further explains why the ticker went on to decline in that day's session.

Summarizing the recent information around AEYE, there are improvements the company has made and there is a risk about investing in its stock. Investors who find interest in AEYE are advised to do their due diligence before deciding to make an investment.

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