AEYE 10-Q
Audioeye Inc (AEYE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from [ ] to [ ]
Commission File Number:
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days.
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of July 30, 2026,
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
AUDIOEYE, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited) | |||||||
| June 30, | | December 31, | ||||
(in thousands, except per share data) | 2026 | 2025 | |||||
ASSETS | |||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | |||
Accounts receivable, net of allowance for credit losses of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net of accumulated depreciation of $ |
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Right of use assets | | | |||||
Intangible assets, net of accumulated amortization of $ |
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Goodwill | | | |||||
Other |
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Total assets | $ | | $ | | |||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses | $ | | $ | | |||
Operating lease liabilities | | | |||||
Deferred revenue |
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Contingent consideration | | | |||||
Term loan, current | | | |||||
Total current liabilities |
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Long term liabilities: |
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Term loan, net | | | |||||
Operating lease liabilities | | — | |||||
Deferred revenue |
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Contingent consideration, long term |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | | |||
See notes to unaudited consolidated financial statements
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AUDIOEYE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended June 30, | Six months ended June 30, | ||||||||||||
(in thousands, except per share data) | | 2026 | | 2025 | | 2026 | | 2025 | |||||
Revenue | $ | | $ | | $ | | $ | | |||||
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Selling and marketing |
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Research and development |
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General and administrative |
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Change in fair value of contingent consideration | — |
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Total operating expenses |
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Operating (loss) income |
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Other expense: |
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Interest expense, net | ( |
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Loss on extinguishment of debt |
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Total other expense | ( | ( | ( | ( | |||||||||
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Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
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Net loss per common share-basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||
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Weighted average common shares outstanding-basic and diluted |
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See notes to unaudited consolidated financial statements
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AUDIOEYE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(unaudited)
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Common stock | Paid-in | Accumulated | ||||||||||||
(in thousands) | | Shares | | Amount | Capital | | Deficit | | Total | |||||
Balance, December 31, 2025 |
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Common stock issued upon settlement of restricted stock units | | — | — | — | — | |||||||||
Issuance of common stock for services | | — | — | — | — | |||||||||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | ( | — | ( | — | ( | |||||||||
Common stock repurchased for retirement | ( | — | — | ( | ( | |||||||||
Stock-based compensation | — | — | | — | | |||||||||
Net loss |
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Balance, March 31, 2026 | | $ | | $ | | $ | ( | $ | | |||||
Common stock issued upon settlement of restricted stock units | | — | — | — | — | |||||||||
Issuance of common stock for services | | — | — | — | — | |||||||||
Common stock issued pursuant to employee stock purchase plan | | — | | — | | |||||||||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | ( | — | ( | — | ( | |||||||||
Stock-based compensation | — | — | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, June 30, 2026 | | $ | | $ | | $ | ( | $ | | |||||
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Additional | ||||||||||||||
Common stock | Paid-in | Accumulated | ||||||||||||
(in thousands) | | Shares | | Amount | | Capital | | Deficit | | Total | ||||
Balance, December 31, 2024 | | $ | | $ | | $ | ( | $ | | |||||
Common stock issued upon settlement of restricted stock units | | — | — | — |
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Common stock issued upon exercise of options on a cash basis | | — | | — | | |||||||||
Issuance of common stock for services | | — | — | — | — | |||||||||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | ( | — | ( | — |
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Stock-based compensation | — | — | | — | | |||||||||
Net loss |
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Balance, March 31, 2025 | | $ | | $ | | $ | ( | $ | | |||||
Common stock issued upon exercise of options on a cashless basis | | — | — | — | — | |||||||||
Common stock issued upon settlement of restricted stock units | | — | — | — | — | |||||||||
Issuance of common stock for services | | — | — | — | — | |||||||||
Common stock issued pursuant to employee stock purchase plan | | — | | — | | |||||||||
Surrender of stock to cover tax liability on settlement of employee stock-based awards | ( | — | ( | — | ( | |||||||||
Common stock repurchased for retirement | ( | — | — | ( | ( | |||||||||
Stock-based compensation | — | — | | — | | |||||||||
Net loss | — | — | — | ( | ( | |||||||||
Balance, June 30, 2025 | | $ | | $ | | $ | ( | $ | | |||||
See notes to unaudited consolidated financial statements
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AUDIOEYE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six months ended June 30, | |||||||
(in thousands) | | 2026 | | 2025 | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization |
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Loss on disposal or impairment of long-lived assets | | | |||||
Loss on extinguishment of debt | — | | |||||
Stock-based compensation expense | | | |||||
Amortization of deferred commissions | | | |||||
Amortization of debt discount and issuance costs |
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Amortization of right-of-use assets | | | |||||
Change in fair value of contingent consideration |
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Provision for accounts receivable | | | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | ( | ( | |||||
Prepaid expenses and other assets | ( | ( | |||||
Accounts payable and accruals |
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Operating lease liability |
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Deferred revenue |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of equipment |
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Software development costs |
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Patent costs | ( | ( | |||||
Payment for acquisitions, net | ( | ( | |||||
Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from term loan, net of lender fees | | | |||||
Payments for costs directly attributable to the issuance of term loan | — | ( | |||||
Repayment of term loan | ( | ( | |||||
Payments for debt extinguishment costs | — | ( | |||||
Proceeds from exercise of options | — | | |||||
Proceeds from employee stock purchase plan | | | |||||
Payments related to settlement of employee share-based awards | ( | ( | |||||
Repurchase of common stock | ( | ( | |||||
Net cash provided by financing activities |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents - beginning of period |
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Cash and cash equivalents - end of period | $ | | $ | | |||
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SUPPLEMENTAL CASH FLOW DISCLOSURES |
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Interest paid | $ | | $ | | |||
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Non-cash investing and financing activities: | | | |||||
Right-of-use assets and operating lease obligations recognized during the year | $ | | $ | — | |||
See notes to unaudited consolidated financial statements
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NOTE 1 — BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of AudioEye, Inc. and its wholly-owned subsidiary Equally AI Ltd. (“we”, “our” or the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K”), as filed with the SEC on March 12, 2026.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Certain information and disclosures normally contained in the audited consolidated financial statements as reported in the Company’s Annual Report on Form 10-K have been condensed or omitted in accordance with the SEC’s rules and regulations for interim reporting. The Company presents its unaudited consolidated financial statements, condensed notes, and other financial information rounded to the nearest thousand United States Dollars (“U.S. Dollar”), except for per share data.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are presented in “Note 2 – Significant Accounting Policies” in the 2025 Form 10-K. Users of financial information for interim periods are encouraged to refer to the footnotes to the consolidated financial statements contained in the 2025 Form 10-K when reviewing interim financial results.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the consolidated financial statements and during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to stock-based compensation, allowance for credit losses, intangible assets, and contingent consideration. Actual results may differ from these estimates.
Revenue Recognition
We derive our revenue primarily from the sale of internally developed software by a software-as-a-service (“SaaS”) delivery model, as well as from professional services, through our direct sales force or through third-party resellers. Our SaaS fees include support and maintenance.
We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
We determine revenue recognition through the following five steps:
| ● | Identify the contract with the customer; |
| ● | Identify the performance obligations in the contract; |
| ● | Determine the transaction price; |
| ● | Allocate the transaction price to the performance obligations in the contract; and |
| ● | Recognize revenue when, or as, the performance obligations are satisfied. |
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Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer.
Our SaaS revenue is comprised of fixed subscription fees from customer accounts on our platform related to our software products. Our support revenue is comprised of subscription fees for customers for periodic auditing, human-assisted technological remediations, legal support, and other professional support services. SaaS and support (also referred to as “subscription”) revenue is recognized on a ratable basis over the contractual subscription term of the arrangement beginning on the date that our service is made available to the customer. Certain SaaS and support fees are invoiced in advance on an annual, semi-annual, or quarterly basis. Any funds received for services not provided yet are held in deferred revenue and are recorded as revenue when the related performance obligations have been satisfied. Our subscription agreements are generally non-cancelable, although clients typically have the right to terminate their contracts for cause if we fail to perform material obligations.
Non-subscription revenue consists primarily of PDF remediation and one-time website and mobile application reporting services and is recognized upon delivery. Consideration payable under PDF remediation arrangements is based on usage. Consideration payable under non-subscription website and mobile application reporting services arrangements is based on fixed fees.
The following tables present our revenues disaggregated by sales channel:
Three months ended June 30, | ||||||
(in thousands) | | 2026 | | 2025 | ||
Partner and Marketplace | $ | |
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Enterprise |
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Total revenues | $ | | $ | | ||
Six months ended June 30, | ||||||
(in thousands) | | 2026 | | 2025 | ||
Partner and Marketplace | $ | |
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Enterprise |
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Total revenues | $ | | $ | | ||
The Company records accounts receivable for amounts invoiced to customers for which the Company has an unconditional right to consideration as provided under the contractual arrangement. Deferred revenue includes payments received in advance of performance under the contract and is reported on an individual contract basis at the end of each reporting period. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue.
The table below summarizes our deferred revenue as of June 30, 2026 and December 31, 2025:
| June 30, | December 31, | ||||
(in thousands) | | 2026 | | 2025 | ||
Deferred revenue – current | $ | | $ | | ||
Deferred revenue – noncurrent | | | ||||
Total deferred revenue | | $ | |
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In the three months ended June 30, 2026, we recognized as revenue $
We had
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revenue in the six months ended June 30, 2026, and
As of June 30, 2026 and December 31, 2025,
Deferred Costs (Contract Acquisition Costs)
We capitalize initial and renewal sales commissions in the period the commission is earned, which generally occurs when a customer contract is obtained, and amortize deferred commission costs on a straight-line basis over the expected period of benefit, which we have deemed to be the contract term. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been one year or less.
The table below summarizes the deferred commission costs as of June 30, 2026 and December 31, 2025, which are included in Prepaid expenses and other current assets (current portion) and Other assets (noncurrent portion) on our consolidated balance sheets:
| June 30, | December 31, | ||||
(in thousands) | | 2026 | | 2025 | ||
Deferred costs – current | $ | | $ | | ||
Deferred costs – noncurrent |
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Total deferred costs | $ | | $ | | ||
Amortization expense associated with sales commissions was included in Selling and marketing expenses on the consolidated statements of operations and totaled $
Business Combinations
The assets acquired, liabilities assumed and contingent consideration in business combinations are recorded at their estimated fair value on the acquisition date with subsequent changes recognized in earnings. These estimates are inherently uncertain and are subject to refinement. Management develops estimates based on assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed as of the business combination date. As a result, changes to the provisional amounts of assets acquired or liabilities assumed that are identified within the measurement period (not to exceed 12 months from the acquisition date) are recorded as adjustments to the purchase price allocation. Any adjustments identified after the measurement period are recognized in earnings in the reporting period in which they are determined.
Acquisition-related expenses primarily consist of legal, accounting, and other advisory fees and are recorded in the period in which they are incurred.
Asset Acquisitions
Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. The Company allocates the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis and goodwill is not recognized in an asset acquisition. Contingent consideration is not recorded in an asset acquisition until it is deemed probable and reasonably estimable. Direct transaction costs are capitalized as a component of the cost of the acquisition.
Intangible Assets
Intangible assets include patents, capitalized software development costs, and customer relationships. Intangible assets with finite lives are amortized on a straight-line basis over their respective estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Intangible assets determined to have
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indefinite useful lives are not amortized but are tested for impairment annually and more frequently if events occur or circumstances change that indicate an asset may be impaired.
As of June 30, 2026 and December 31, 2025, intangible assets primarily included $
Debt Discount and Debt Issuance Costs
Costs related to the issuance of debt due to the lender (debt discount) or to third parties (debt issuance costs) are capitalized and amortized to interest expense over the term of the related debt on a straight-line basis, which is not materially different from the effective interest method. Debt discount and debt issuance costs are presented on the Company’s consolidated balance sheets as a direct deduction from the carrying amount of our term loan.
Employee Stock Purchase Plan
In May 2022, the stockholders of the Company approved the Company’s Employee Stock Purchase Plan (the “ESPP”), which provides for the issuance of up to
Under the ESPP, a participant may not be granted rights to purchase more than $
Stock-Based Compensation
The Company periodically issues options, restricted stock units (“RSUs”), and shares of its common stock as compensation for services received from its employees, directors, and consultants. The fair value of the award is measured on the grant date. The fair value amount is then recognized as expense over the requisite vesting period during which services are required to be provided in exchange for the award. We recognize forfeitures as they occur. Stock-based compensation expense is recorded in the same expense classifications in the consolidated statements of operations as if such amounts were paid in cash.
The fair value of option awards is measured on the grant date using a Black-Scholes option pricing model, which includes assumptions that are subjective and are generally derived from external data (such as risk-free rate of interest) and historical data (such as volatility factor and expected term).
We estimate the fair value of restricted stock unit awards with time- or performance-based vesting using the value of our common stock on the grant date. We estimate the fair value of market-based restricted stock unit awards as of the grant date using the Monte Carlo simulation model.
We expense the compensation cost associated with time-based options and RSUs as the restriction period lapses, which is typically a - to
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market conditions are recognized on a straight-line basis over the requisite service period regardless of whether the market condition is satisfied and is not reversed provided that the requisite service period derived from the Monte-Carlo simulation has been completed. If vesting occurs prior to the end of the requisite service period, expense is accelerated and fully recognized through the vesting date.
Earnings (Loss) Per Share (“EPS”)
Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted EPS is calculated based on the net income (loss) available to common stockholders and the weighted average number of shares of common stock outstanding during the period, adjusted for the effects of all potential dilutive common stock issuances related to options and restricted stock units. The dilutive effect of our stock-based awards is computed using the treasury stock method, which assumes all stock-based awards are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (i.e., the difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. However, when a net loss exists, no potential common stock equivalents are included in the computation of the diluted per-share amount because the computation would result in an anti-dilutive per-share amount.
Potentially dilutive securities outstanding as of June 30, 2026 and 2025, which were excluded from the computation of basic and diluted net loss per share for the periods then ended, are as follows:
June 30, | ||||
(in thousands) | | 2026 | | 2025 |
Options |
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Total |
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Stock Repurchases
In January 2025, the Board of Directors adopted a share repurchase program authorizing the repurchase of up to $
Shares repurchased by the Company are immediately retired. The Company made an accounting policy election to charge the excess of repurchase price over par value entirely to retained earnings.
Fair Value of Financial Instruments
Fair value is an estimate of the exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market participant assumptions in the absence of observable market information. Assets and liabilities required to be measured at fair value are categorized based upon the level of judgment associated with the inputs used to measure their value in one of the following three categories:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.
Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.
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The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments.
The table below provides information on our Level 3 liabilities:
| Six Months Ended | ||
June 30, 2026 | |||
(in thousands) | Level 3 | ||
Contingent consideration (1) | |||
Balance at December 31, 2025 | $ | | |
Additions | — | ||
Change in fair value of contingent consideration (2) | ( | ||
Balance at June 30, 2026 | $ | | |
| (1) | Represents the contingent consideration liability recorded in connection with asset acquisitions in 2025. The fair value of the contingent consideration was determined by management based on estimated recurring revenue from acquired customer relationships. |
| (2) | Represents the change in fair value of the contingent consideration liability recorded in connection with asset acquisitions in 2025. The change in fair value is recognized as an adjustment to the cost of the acquired assets. |
Recent Accounting Pronouncements
Recently Adopted
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to measure credit losses on accounts receivable and contract assets. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This ASU is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods. The Company adopted this ASU on January 1, 2026, on a prospective basis. The adoption of ASU 2025-05 did not have a significant impact on the Company's consolidated financial statements.
Not Yet Adopted
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is evaluating the impact of ASU 2025-06 on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) to improve the disclosures about a public entity’s expenses and provide more detailed information about the types of expenses included in certain expense captions in the consolidated financial statements. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of the new standard on the disclosures in its consolidated financial statements.
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NOTE 3 — DEBT
Term Loan and Revolving Credit Facility with Western Alliance Bank
On March 31, 2025, the Company entered into a Loan and Security Agreement (the “Credit Facility Agreement”) with Western Alliance Bank, an Arizona corporation (the “Lender”). The Credit Facility Agreement provides for borrowings of up to $
The outstanding Term Advances and the Revolving Facility bear interest on the outstanding daily balance at a floating rate equal to
For each Term Advance, the Company was obligated to pay interest-only payments with respect to such Term Advance through April 9, 2026. Beginning on April 10, 2026, the Company is obligated to repay each outstanding Term Advance in (i) quarterly principal payments in the amount of $
The Company incurred $
In the three and six months ended June 30, 2026, the aggregate amortization of debt discount and debt issuance costs totaled $
The Credit Facility Agreement is secured by substantially all of our assets and contains certain customary financial covenants, including the requirements that the Company maintain at all times from the closing date through and including the calendar quarter ended June 30, 2026, (a) unrestricted and unencumbered cash held in accounts with the Lender equal to at least $
As of June 30, 2026, the outstanding principal balance of our term loan totaled $
14
As of June 30, 2026, future principal payments of debt based on the principal balance then outstanding are as follows (in thousands):
Year ending December 31, | | Term Loan | |
2026 (6 months remaining) | $ | | |
2027 | | ||
2028 | | ||
2029 | | ||
2030 | | ||
Total repayments | $ | | |
As of June 30, 2026, the $
(in thousands) | June 30, 2026 | ||
Term loan principal | $ | | |
Less: unamortized debt discount and debt issuance costs | ( | ||
Term loan, net | $ | | |
Term loan, current | $ | | |
Term loan, noncurrent | $ | | |
Term Loan with SG Credit Partners
On November 30, 2023, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with SG Credit Partners, Inc., a Delaware corporation. The Loan Agreement provided for a $
On March 31, 2025, the Company paid $
NOTE 4 — COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, we are involved in various legal proceedings. These matters are subject to inherent uncertainties, and it is possible that some of these matters could ultimately be decided, resolved or settled adversely to us. Further, even if these matters are resolved favorably, they may require the expenditure of significant fees and costs.
On the basis of our current knowledge and understanding, we do not believe that judgments, settlements or orders, if any, arising from these matters (either individually or in the aggregate) will have a material adverse effect on our financial position or results of operations.
15
Contingent Consideration
The Company recorded contingent consideration liabilities in connection with certain asset acquisition transactions in fiscal year 2025. The fair value of the contingent consideration liabilities was determined by management based on estimated recurring revenue from acquired customer relationships. As of June 30, 2026, the total contingent consideration liability was $
Operating Leases
The Company has operating leases for office space in Tucson, Arizona, and Miami Beach, Florida. The following summarizes the total lease liabilities and remaining future minimum lease payments as of June 30, 2026 (in thousands):
Year ending December 31, | Operating Leases | ||
2026 (6 months remaining) | $ | | |
2027 | | ||
2028 | | ||
2029 | | ||
2030 | | ||
Thereafter | | ||
Total minimum lease payments |
| | |
Less: present value discount |
| ( | |
Total lease liabilities | $ | | |
Current portion of lease liabilities | $ | | |
Long term portion of lease liabilities | $ | | |
NOTE 5 — STOCK-BASED COMPENSATION
The following table summarizes the stock-based compensation expense recorded for the three and six months ended June 30, 2026 and 2025:
Three months ended June 30, | Six months ended June 30, | |||||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
RSUs | $ | | $ | | $ | | $ | | ||||
Unrestricted shares of common stock | | | | | ||||||||
Employee stock purchase plan | | | | | ||||||||
Total | $ | | $ | | $ | | $ | | ||||
As of June 30, 2026, the unrecognized stock-based compensation expense related to outstanding RSUs totaled $
The following table summarizes the stock option and RSUs activity for the six months ended June 30, 2026:
| Options | | RSUs | |
Outstanding at December 31, 2025 |
| |
| |
Granted |
| — |
| |
Exercised/Settled |
| — |
| ( |
Forfeited/Expired |
| ( |
| ( |
Outstanding at June 30, 2026 |
| |
| |
Vested at June 30, 2026 | | | ||
Unvested at June 30, 2026 | — | |
16
On May 4, 2026, the Company amended and restated its employment agreements with Kelly Georgevich, in connection with her appointment as Chief Executive Officer, and with David Moradi, in connection with his appointment as Executive Chairman and Chief Product Officer. Pursuant to such agreements, all of their time-based RSUs that were outstanding on May 4, 2026 vested on a pro rata basis through and including May 4, 2026, and the remaining unvested RSUs were cancelled. In addition, all outstanding performance shares held by Mr. Moradi were cancelled on May 4, 2026.
Concurrent with the cancellations on May 4, 2026, the executives were granted new equity awards. Ms. Georgevich was granted
The modifications to the outstanding equity awards held by Ms. Georgevich and Mr. Moradi, as well as the new grants, were accounted for under ASC 718, Compensation — Stock Compensation. Accordingly, incremental compensation cost of $
The Company accounted for Mr. Moradi's awards as a single combined-package modification, treating his entire pre-modification equity portfolio as
NOTE 6 — SEGMENT INFORMATION
The Company has a reportable segment focused on the sale of similar products and related services. This reportable segment derives revenues from customers by selling subscriptions for our digital accessibility platform delivering website accessibility compliance and providing services related to digital accessibility.
The Company’s chief operating decision-maker (the "CODM”), who is the chief executive officer, assesses performance for the reportable segment and decides how to allocate resources using net income as the primary measure of profitability. The CODM is not regularly provided with segment specific expenses, but focuses on revenue, gross margin, and net income. The significant expense categories regularly provided to and reviewed by the CODM are consistent with the expense line items presented on the face of the Company's consolidated statements of operations. These segment measures of profitability are shown in the consolidated statements of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets.
NOTE 7 — SUBSEQUENT EVENTS
We have evaluated subsequent events occurring after June 30, 2026, and based on our evaluation we did not identify any events that would have required recognition or disclosure in these consolidated financial statements.
17
Item 2. 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.
18
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 mobile application and audit 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 June 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 June 30, 2026, total revenue increased by 9% over the prior year comparable period. As of June 30, 2026, Annual Recurring Revenue (“ARR”) was approximately $42.3 million, which represented an increase of 11% year-over-year. Refer to “Other Key Operating Metrics” below for details on how we calculate ARR.
As of June 30, 2026, AudioEye had approximately 129,000 customers, a 7% increase from 120,000 customers at June 30, 2025. The increase in customer count was attributable to an increase in our Partner and Marketplace channel customers.
In the three months ended June 30, 2026, revenue from our Partner and Marketplace channel grew 16% 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 June 30, 2026. In three months ended June 30, 2026, total Enterprise channel revenue remained consistent with the prior year comparable period, as the growth in recurring revenue was mostly offset by attrition of customers added through acquisition and a reduction in non-recurring revenue. The Enterprise channel represented about 41% of ARR as of June 30, 2026.
We had two customers (including, for each such customer, the customer’s affiliates) which accounted for 10% and 13% of our total revenue, respectively, or 23% in aggregate, in the three months ended June 30, 2026. One customer accounted for 13% of our total revenue in the six months ended June 30, 2026.
The Company continued to invest in research and development in the second 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 June 30, 2026. In the three months ended June 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.
19
In the three months ended June 30, 2026, selling and marketing expense decreased from the prior year comparable period. The decrease in selling and marketing expense was mainly driven by a reduction in marketing personnel resulting from efficiencies gained with the implementation of AI tools and automation, partially offset by higher third-party marketing expenses.
In the three months ended June 30, 2026, general and administrative expense increased from the prior year comparable period. The increase in general and administrative expenses was due primarily to higher litigation expense, severance associated with a reduction in headcount, and amortization 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 six months ended June 30, 2026 with the three and six months ended June 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 June 30, | Change |
| ||||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Revenue | $ | 10,716 |
| $ | 9,857 |
| $ | 859 | 9 | % | ||
Cost of revenue |
| 2,267 |
|
| 2,238 |
|
| 29 | 1 | % | ||
Gross profit |
| 8,449 |
|
| 7,619 |
|
| 830 | 11 | % | ||
Operating expenses: |
|
|
|
|
|
|
| |||||
Selling and marketing |
| 3,650 |
|
| 3,806 |
|
| (156) | (4) | % | ||
Research and development |
| 849 |
|
| 1,200 |
|
| (351) | (29) | % | ||
General and administrative |
| 4,548 |
|
| 3,731 |
|
| 817 | 22 | % | ||
Change in fair value of contingent consideration |
| — |
|
| (1,360) |
|
| 1,360 | (100) | % | ||
Total operating expenses |
| 9,047 |
|
| 7,377 |
|
| 1,670 | 23 | % | ||
Operating (loss) income |
| (598) |
|
| 242 |
|
| (840) | (347) | % | ||
Other expense: | ||||||||||||
Interest expense, net |
| (267) |
| (244) |
| (23) | 9 | % | ||||
Net loss | $ | (865) |
| $ | (2) |
| $ | (863) | N/A | % | ||
20
Six months ended June 30, | Change |
| ||||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % | ||||
Revenue | $ | 21,269 | $ | 19,590 | $ | 1,679 | 9 | % | ||||
Cost of revenue |
| 4,568 |
| 4,233 |
| 335 | 8 | % | ||||
Gross profit |
| 16,701 |
| 15,357 |
| 1,344 | 9 | % | ||||
Operating expenses: |
|
|
|
|
|
|
| |||||
Selling and marketing |
| 7,502 |
| 7,520 |
| (18) | (0) | % | ||||
Research and development |
| 1,959 |
| 2,353 |
| (394) | (17) | % | ||||
General and administrative |
| 9,721 |
| 7,492 |
| 2,229 | 30 | % | ||||
Change in fair value of contingent consideration |
| — |
| (1,310) |
| 1,310 | (100) | % | ||||
Total operating expenses |
| 19,182 |
| 16,055 |
| 3,127 | 19 | % | ||||
Operating loss |
| (2,481) |
| (698) |
| (1,783) | 255 | % | ||||
Other expense: | ||||||||||||
Interest expense, net | (498) | (473) | (25) | 5 | % | |||||||
Loss on extinguishment of debt | — | (300) | 300 | (100) | % | |||||||
Total other expense | (498) | (773) | 275 | (36) | % | |||||||
Net loss | $ | (2,979) | $ | (1,471) | $ | (1,508) | 103 | % | ||||
Revenue
The following tables present our revenues disaggregated by sales channel:
| Three months ended June 30, | | Change |
| ||||||||
(in thousands) |
| 2026 | | 2025 | | $ | | % | ||||
Partner and Marketplace | $ | 6,244 |
| $ | 5,399 |
| $ | 845 | 16 | % | ||
Enterprise |
| 4,472 |
|
| 4,458 |
|
| 14 | 0 | % | ||
Total revenues | $ | 10,716 |
| $ | 9,857 |
| $ | 859 | 9 | % | ||
| Six months ended June 30, | | Change |
| ||||||||
(in thousands) | 2026 | 2025 | $ | % |
| |||||||
Partner and Marketplace | $ | 12,215 | $ | 10,919 | $ | 1,296 | 12 | % | ||||
Enterprise |
| 9,054 |
| 8,671 |
| 383 | 4 | % | ||||
Total revenue | $ | 21,269 | $ | 19,590 | $ | 1,679 | 9 | % | ||||
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 each of the three and six months ended June 30, 2026, total revenue increased by 9% over the prior year comparable periods. The 16% and 12% increases in Partner and Marketplace channel revenue for the three and six months ended June 30, 2026, respectively, were primarily due to continued expansion with existing partners.
For the three months ended June 30, 2026, Enterprise channel revenue remained consistent with the prior year comparable period as the growth in recurring revenue was mostly offset by attrition of customers added through acquisition and a reduction in non-recurring revenue. The 4% increase in Enterprise channel revenue for the six months ended June 30, 2026 was driven primarily by new customer relationships.
21
Cost of Revenue and Gross Profit
Three months ended June 30, | | Change |
| |||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Revenue | $ | 10,716 |
| $ | 9,857 |
| $ | 859 | 9 | % | ||
Cost of Revenue |
| 2,267 |
|
| 2,238 |
|
| 29 | 1 | % | ||
Gross profit | $ | 8,449 |
| $ | 7,619 |
| $ | 830 | 11 | % | ||
Six months ended June 30, | Change |
| ||||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Revenue | $ | 21,269 | $ | 19,590 | $ | 1,679 | 9 | % | ||||
Cost of revenue |
| 4,568 |
| 4,233 |
| 335 | 8 | % | ||||
Gross profit | $ | 16,701 | $ | 15,357 | $ | 1,344 | 9 | % | ||||
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 six months ended June 30, 2026, cost of revenue increased by 1% and 8%, respectively, over the prior year comparable periods. The increases in cost of revenue were primarily due to higher costs incurred for service delivery supporting our increased revenue, partially offset by a reduction in employee headcount as a result of efficiency gains from newly implemented AI tools and automation.
For the three and six months ended June 30, 2026, gross profit increased by 11% and 9%, respectively, over the prior year comparable periods. The increases in gross profit were primarily a result of increased revenue from new customers exceeding the incremental fulfilment cost.
Selling and Marketing Expenses
| Three months ended June 30, | | Change |
| ||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Selling and marketing | $ | 3,650 | $ | 3,806 |
| $ | (156) | (4) | % | |||
| Six months ended June 30, | Change | ||||||||||
(in thousands) | 2026 | | 2025 | | $ | | % |
| ||||
Selling and marketing | $ | 7,502 | $ | 7,520 | $ | (18) | (0) | % | ||||
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 months ended June 30, 2026, selling and marketing expenses decreased by 4% from the prior year comparable period. The decrease in selling and marketing expenses resulted primarily from a reduction in marketing personnel resulting from efficiencies gained with the implementation of AI tools and automation, partially offset by an increase in third-party marketing expenses. Selling and marketing expenses for the six months ended June 30, 2026 were consistent with the prior year comparable period.
22
Research and Development Expenses
| Three months ended June 30, | | Change |
| ||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Research and development expense | $ | 849 |
| $ | 1,200 |
| $ | (351) | (29) | % | ||
Plus: Capitalized research and development cost |
| 389 |
|
| 506 |
|
| (117) | (23) | % | ||
Total research and development cost | $ | 1,238 |
| $ | 1,706 |
| $ | (468) | (27) | % | ||
| Six months ended June 30, | Change | ||||||||||
(in thousands) | 2026 | | 2025 | | $ | | % |
| ||||
Research and development expense | $ | 1,959 | $ | 2,353 | $ | (394) | (17) | % | ||||
Plus: Capitalized research and development cost |
| 854 |
| 978 |
| (124) | (13) | % | ||||
Total research and development cost | $ | 2,813 | $ | 3,331 | $ | (518) | (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 six months ended June 30, 2026, R&D expenses decreased by 29% and 17%, 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 six months ended June 30, 2026, capitalized R&D cost decreased by 23% and 13%, respectively, from the prior year comparable periods primarily due to a reduction in engineering personnel. For the three and six months ended June 30, 2026, total R&D cost, which includes both R&D expenses and capitalized R&D costs, decreased by 27% and 16%, respectively, from the prior year comparable periods.
General and Administrative Expenses
Three months ended June 30, | Change |
| ||||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % | ||||
General and administrative | $ | 4,548 | $ | 3,731 | $ | 817 |
| 22 | % | |||
Six months ended June 30, | Change | |||||||||||
(in thousands) | 2026 | | 2025 | $ | | % |
| |||||
General and administrative | $ | 9,721 | $ | 7,492 | $ | 2,229 | 30 | % | ||||
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 six months ended June 30, 2026, general and administrative expenses increased by 22% and 30%, respectively, over the prior year comparable periods. The increases in general and administrative expense were due primarily to an increase in litigation expense, as well as higher severance cost associated with a reduction in headcount and amortization expense associated with our intangible assets.
23
Change in Fair Value of Contingent Consideration
Three months ended June 30, | Change |
| ||||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % | ||||
Change in fair value of contingent consideration | $ | — | $ | (1,360) | $ | 1,360 |
| (100) | % | |||
Six months ended June 30, | Change | |||||||||||
(in thousands) | 2026 | | 2025 | $ | | % |
| |||||
Change in fair value of contingent consideration | $ | — | $ | (1,310) | $ | 1,310 | (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 six months ended June 30, 2026, no change in fair value of contingent consideration was recorded.
Interest Expense
| Three months ended June 30, | | Change |
| ||||||||
(in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Interest expense, net | $ | (267) |
| $ | (244) |
| $ | (23) | 9 | % | ||
| Six months ended June 30, | | Change |
| ||||||||
(in thousands) | 2026 | | 2025 | $ | | % |
| |||||
Interest expense, net | $ | (498) | $ | (473) | $ | (25) | 5 | % | ||||
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 six months ended June 30, 2026, interest expense, net increased by 9% and 5%, 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
| Six months ended June 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 six months ended June 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
24
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 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 June 30, 2026, ARR was $42.3 million, which represents an increase of 11% year-over-year, driven by growth in both our Partner and Marketplace channel and Enterprise channel.
Liquidity and Capital Resources
Working Capital
(in thousands) | June 30, 2026 | | December 31, 2025 | ||||
Current assets | $ | 16,305 | $ | 12,622 | |||
Current liabilities |
| (15,331) |
| (14,416) | |||
Working capital (deficit) | $ | 974 | $ | (1,794) | |||
As of June 30, 2026, we had $8,717,000 in cash and cash equivalents and working capital of $974,000. The $2.8 million increase in working capital in the six months ended June 30, 2026 was primarily due to our $3.6 million draw of the remaining subsequent term loan advances available to the Company, partially offset by the $0.8 million increase in deferred revenue.
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 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 the program are subsequently retired and restored to the status of authorized but unissued shares of common stock. In the six months ended June 30, 2026, we used $475,000 of the program to repurchase shares. As of June 30, 2026, we had $7.45 million remaining for the repurchase of shares under the program.
As of June 30, 2026, we had $16.8 million outstanding under the term loan, $15.9 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 June 30, 2026, we were in compliance with all covenants under the credit facility.
As of August 13, 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
Six months ended June 30, | |||||||
(in thousands) | | 2026 | | 2025 | |||
Net cash provided by operating activities | | $ | 2,277 | $ | 1,171 | ||
Net cash used in investing activities |
| (1,145) |
| (2,671) | |||
Net cash provided by financing activities |
| 2,297 |
| 2,718 | |||
Net increase in cash and cash equivalents | $ | 3,429 | $ | 1,218 | |||
For the six months ended June 30, 2026, in relation to the prior year comparable period, cash provided by operating activities increased primarily due to the timing of customer payments.
For the six months ended June 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.
25
For the six months ended June 30, 2026, in relation to the prior year comparable period, cash provided by financing activities decreased primarily due to lower net proceeds from credit facility activity, partially offset by a reduction in repurchases of common stock and lower payments related to settlement of employee share-based awards. In the six months ended June 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 facilities.
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that there is reasonable assurance that the information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Exchange Act Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, projections of any evaluation of effectiveness of our disclosure controls and procedures to future periods are subject to the risk that controls or procedures may become inadequate because of changes in conditions, or that the degree of compliance with the controls or procedures may deteriorate.
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s senior management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures to provide reasonable assurance of achieving the desired objectives of the disclosure controls and procedures. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Controls over Financial Reporting
During the quarter ended June 30, 2026, there were no changes in our internal control over financial reporting that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
26
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in various legal proceedings. These matters are subject to inherent uncertainties, and it is possible that some of these matters could ultimately be decided, resolved or settled adversely to us. Further, even if these matters are resolved favorably, they may require the expenditure of significant fees and costs.
On the basis of our current knowledge and understanding, we do not believe that judgments, settlements or orders, if any, arising from these matters (either individually or in the aggregate) will have a material adverse effect on our financial position or results of operations.
Item 1A. Risk Factors
You should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”), which could materially affect our business, financial condition and results of operations. There have been no material changes to the risk factors set forth in the 2025 Form 10-K. The risks described in our 2025 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth information with respect to our repurchases of common stock during the three months ended June 30, 2026:
| | |||||||||
Maximum Number (or | ||||||||||
Total Number of | Approximate Dollar | |||||||||
Shares Purchased | Value) of Shares that | |||||||||
as Part of Publicly | May Yet Be Purchased | |||||||||
Total Number of | Average Price | Announced Plans or | under the Plans or | |||||||
Period | | Shares Purchased | | Paid per Share | | Programs | | Programs | ||
April 1 - April 30, 2026: |
|
|
| |||||||
Employee transactions (1) |
| 3,319 | $ | 6.72 |
| — | $ | — | ||
Share repurchase program (2) | — | — | — | 7,450,000 | ||||||
May 1 - May 31, 2026: |
| |||||||||
Employee transactions (1) |
| 24,729 | 7.77 |
| — |
| — | |||
Share repurchase program (2) | — | — | — | 7,450,000 | ||||||
June 1 - June 30, 2026: | ||||||||||
Employee transactions (1) | 7,629 | 6.02 | — | — | ||||||
Share repurchase program (2) | — | — | — | 7,450,000 | ||||||
Total: | ||||||||||
Employee transactions (1) | 35,677 | $ | 7.30 | — | $ | — | ||||
Share repurchase program (2) | — | $ | — | — | $ | 7,450,000 | ||||
| (1) | Consists of shares surrendered by employees to satisfy tax withholding obligations in connection with the settlement of restricted stock units and the issuance of common stock. |
| (2) | 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. Shares repurchased under the program are subsequently retired. |
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2026, no director or executive officer
27
Item 6. Exhibits
| Incorporation by Reference | |||||||||
Exhibit No. | | Description | | Form | | Date of Filing | | Exhibit No. | | Filed Herewith |
3.1 | Restated Certificate of Incorporation of AudioEye, Inc., dated as of May 24, 2024 | 8-K | May 24, 2024 | 3.3 | ||||||
3.2 | 10-Q | July 29, 2024 | 3.3 | |||||||
10.1 | 8-K | May 7, 2026 | 10.1 | |||||||
10.2 | 8-K | May 7, 2026 | 10.2 | |||||||
10.3 | 8-K | June 18, 2026 | 10.1 | |||||||
10.4 | X | |||||||||
10.5 | X | |||||||||
10.6 | Restricted Stock Unit Award Agreement, dated May 4, 2026, between AudioEye, Inc. and David Moradi | X | ||||||||
10.7 | Performance Stock Unit Award Agreement, dated May 4, 2026, between AudioEye, Inc. and David Moradi | X | ||||||||
10.8 | X | |||||||||
10.9 | X | |||||||||
10.10 | X | |||||||||
31.1 | X | |||||||||
31.2 | X | |||||||||
32.1 | X | |||||||||
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101.INS | Inline XBRL Instance Document | |||||||||
| ||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||
| ||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||
| ||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||
| ||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||
| ||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||
104 | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AUDIOEYE, INC. | |||||
Date: | August 13, 2026 | | By: | /s/ Kelly Georgevich | |
Kelly Georgevich | |||||
Principal Executive Officer | |||||
Date: | August 13, 2026 | | By: | /s/ Matthew Domeyer | |
Matthew Domeyer | |||||
Principal Financial Officer | |||||
30
Exhibit 10.4
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Restricted Stock Unit Award Agreement
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Restricted Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Restricted Stock Unit Award Agreement (the “Agreement”), consisting of this cover page and the Terms and Conditions on the following pages, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant:KELLY GEORGEVICH | |
Number of Restricted Stock Units:50,000 | Grant Date:May 4, 2026 |
Vesting Schedule: | |
| |
Scheduled Vesting Dates 8,333 12,500 12,500 12,500 4,167 | Number of Restricted Stock Units that Vest June 30, 2026 September 30, 2026 December 31, 2026 March 31, 2027 May 4, 2027 |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Restricted Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
/s/ Kelly Georgevich | | By: | /s/ David Moradi |
Print: Kelly Georgevich | | Title: | Executive Chairman |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Restricted Stock Unit Award Agreement
Terms and Conditions
1.Grant of Restricted Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions in this Agreement and the Plan, of the number of Restricted Stock Units specified on the cover page of this Agreement (the “Units”). Each Unit represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to an account in your name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to this Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect. The Units and your right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in Section 5 until satisfaction of the vesting conditions set forth in Section 4.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to you upon settlement of the Units as provided in Section 6.
4.Vesting of Units. For purposes of this Agreement, “Vesting Date” means any date, including the Scheduled Vesting Dates specified in the Vesting Schedule on the cover page of this Agreement, on which Units subject to this Agreement vest as provided in this Section 4.
(a)Scheduled Vesting. If you remain a Service Provider continuously from the Grant Date specified on the cover page of this Agreement, then the Units will vest in the amounts and on the Scheduled Vesting Dates specified in the Vesting Schedule.
(b)Accelerated or Continued Vesting. The vesting of outstanding Units will be accelerated or continued under the circumstances provided below:
(1)Death. If your Service terminates prior to the final Scheduled Vesting Date due to your death, then all of the unvested Units shall vest as of such termination date.
(2)Disability. If your Service terminates prior to the final Scheduled Vesting Date due to your Disability, then a pro rata portion (based on the number of days during which you were a Service Provider since the most recent Scheduled Vesting Date (or since the Grant Date if there was no previous Scheduled Vesting Date) as a percentage of 365) of the Units scheduled to vest as of the next Scheduled Vesting Date shall vest as of such termination date.
RSU Agreement (2020 Equity Incentive Plan) | Page 2 |
(3)Change of Control. If a Change of Control (as defined in the Amended and Restated Employment Agreement, dated as of May 4, 2026, between you and the Company (as may be amended, restated or modified, the “Employment Agreement”)) occurs while you continue to be a Service Provider and prior to the final Scheduled Vesting Date, the following provisions shall apply:
(i)If, within 12 months after the Change of Control and in connection with which the surviving or acquiring entity (or its parent entity) has continued, assumed or replaced this Award, you cease to be a Service Provider due either to an involuntary termination for reasons other than Cause (as defined in the Employment Agreement) or a resignation for Good Reason (as defined in the Employment Agreement), then all unvested Units shall immediately vest in full.
(ii)If this Award is not continued, assumed or replaced in connection with a Change of Control that constitutes a Corporate Transaction, then all unvested Units shall immediately vest in full upon the occurrence of the Change of Control.
(iii)For purposes of this Section 4(b)(3), this Award will be considered assumed or replaced under the circumstances specified in Section 12(b)(1) of the Plan.
5.Effect of Termination of Service. Except as otherwise provided in accordance with Section 4(b) above, if you cease to be a Service Provider, you will forfeit all unvested Units.
6.Settlement of Units. After any Units vest pursuant to Section 4, the Company shall, as soon as practicable (but no later than the 15th day of the third calendar month following the Vesting Date), cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to the tax withholding provisions of Section 8 and compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this Agreement, and all fees and expenses incurred by it in connection therewith.
7.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on each dividend payment date a dividend equivalent dollar amount equal to the number of Units credited to your account pursuant to this Agreement as of the dividend record date times the dollar amount of the cash dividend per Share shall be deemed reinvested in additional Units as of the dividend payment date and such additional Units shall be credited to your account. The number of additional Units so credited shall be determined based on the Fair Market Value of a Share on the dividend payment date. Any additional Units so credited will be subject to the same terms and conditions, including the timing of vesting and settlement, applicable to the underlying Units to which the dividend equivalents relate.
8.Tax Consequences and Withholding. No Shares will be delivered to you in settlement of vested Units unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the delivery of the Shares. You hereby authorize the Company (or any Affiliate) to withhold from payroll or other amounts payable to you any sums required to satisfy such withholding tax obligations, and otherwise agree to satisfy such
RSU Agreement (2020 Equity Incentive Plan) | Page 3 |
obligations in accordance with the provisions of Section 14 of the Plan. You may elect to satisfy such withholding tax obligations by having the Company withhold a number of Shares that would otherwise be issued to you in settlement of the Units and that have a fair market value equal to the amount of such withholding tax obligations by notifying the Company of such election prior to the Vesting Date.
9.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Executive Chairman, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, dmoradi@audioeye, and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
10.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by
RSU Agreement (2020 Equity Incentive Plan) | Page 4 |
the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the SEC or any national securities exchange on which the Common Stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.
(h)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Restricted Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
RSU Agreement (2020 Equity Incentive Plan) | Page 5 |
Exhibit 10.5
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Performance Stock Unit Agreement
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Performance Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Performance Stock Unit Agreement (the “Agreement”), consisting of this cover page, the Terms and Conditions on the following pages and the attached Exhibit A, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant: | Kelly Georgevich |
Target Number of Performance Stock Units: | 60,000 |
Maximum Number of Performance Stock Units: | 60,000 |
Grant Date: | May 4, 2026 |
Performance Period: | With respect to 43,333 PSUs, January 1, 2026 – December 31, 2026 (the “2026 Performance Period”) With respect to 16,667 PSUs, January 1, 2027 – December 31, 2027 (the “2027 Performance Period”) |
Vesting Schedule: | The number of Units determined in accordance with Exhibit A to have been earned as of the end of the applicable Performance Period will vest* on the date the Company’s Compensation Committee certifies such performance results, which shall be no later than March 10 of the calendar year immediately following the calendar year during which the applicable Performance Period ended , subject to earlier vesting or termination as provided in the attached Terms and Conditions |
Performance Goals: | See Exhibit A |
* Assumes your Service has been continuous from the Grant Date to the vesting date. | |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Performance Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
/s/ Kelly Georgevich | | By: | /s/ David Moradi |
Print: Kelly Georgevich | | Title: | Executive Chairman |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Performance Stock Unit Agreement
Terms and Conditions
1.Award of Performance Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions of this Agreement and the Plan, of an award of Performance Stock Units (the “Units”) in an amount initially equal to the Target Number of Performance Stock Units specified on the cover page of this Agreement. The number of Units that may actually be earned and become eligible to vest pursuant to this Award can be between 0% and 100% of the Target Number of Units, but may not exceed the Maximum Number of Performance Stock Units specified on the cover page of this Agreement. Each Unit that is earned as a result of the performance goals specified in Exhibit A to this Agreement having been satisfied and which thereafter vests represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to a performance stock unit account in your name maintained by the Company. This account will be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to the Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect. The Units and your right to receive Shares in settlement of any Units under this Agreement shall be subject to forfeiture except to extent the Units have been earned and thereafter vest as provided in Sections 4 and 5.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with any Units granted or earned pursuant to this Agreement unless and until Shares are issued to you in settlement of earned and vested Units as provided in Section 5.
4.Vesting and Forfeiture of Units. The Units shall vest at the earliest of the following times and to the degree specified.
(a)Scheduled Vesting. The number of Units that have been earned during each Performance Period, as determined by the Committee in accordance with Exhibit A, will vest on the applicable Scheduled Vesting Date, so long as your Service has been continuous from the Grant Date to the Scheduled Vesting Date, except as otherwise provided herein. For these purposes, the “Scheduled Vesting Date” means the date the Committee certifies (i) the degree to which the applicable performance goals for the applicable Performance Period have been satisfied, and (ii) the number of Units that have been earned during the applicable Performance Period as determined in accordance Exhibit A, which certification shall occur no later than March 10 of the calendar year immediately following the calendar year during which the Performance Period ended.
(b)Disability. If your Service terminates by reason of your Disability prior to a Scheduled Vesting Date, then, except as otherwise provided in Section 4(d), you will be entitled to have vest on the Scheduled Vesting Date a pro rata portion of the Units that would otherwise have been determined to have been earned during the Performance Period in accordance with Exhibit A if your Service had been continuous until the Scheduled Vesting Date. The pro rata portion shall be determined by multiplying the number of Units that
PSU Agreement (2020 Equity Incentive Plan) | Page 2 |
would otherwise have been determined to have been earned by a fraction whose numerator is the number of days during the Performance Period prior to your employment termination date and whose denominator is the number of days in the Performance Period.
(c)Death. If your Service terminates by reason of your death prior to a Scheduled Vesting Date, then, except as otherwise provided in Section 4(d), you will be entitled to have vest on the date your Service terminates a pro rata portion of the Target Number of Units specified on the cover page of this Agreement. The pro rata portion shall be determined in the same manner as provided in Section 4(b) above.
(d)Change in Control. Notwithstanding the foregoing, if a Change of Control (as defined in the Amended and Restated Employment Agreement, dated as of May 4, 2026, between you and the Company (as may be amended, restated or modified, the “Employment Agreement”)) occurs while you continue to be a Service Provider and prior to the final Scheduled Vesting Date, the following provisions shall apply:
(i)If, within 12 months after the Change of Control and in connection with which the surviving or acquiring entity (or its parent entity) has continued, assumed or replaced this Award, you cease to be a Service Provider due either to an involuntary termination for reasons other than Cause (as defined in the Employment Agreement) or a resignation for Good Reason (as defined in the Employment Agreement), then 100% of the Target Number of Units then remaining outstanding shall be deemed to have been earned and vested as of such termination date.
(ii)If this Award is not continued, assumed or replaced in connection with a Change of Control that constitutes a Corporate Transaction, then the Units shall be deemed to have been earned and vested immediately prior to the effective time of the Corporate Transaction to the degree and in the manner provided in Section 4(d)(iii).
(iii)The number of Units that would be deemed earned and vested pursuant to Section 4(d)(ii) will be equal to the number of Units if the performance goals are deemed to have been satisfied at the target level of performance and the vested portion of the Units at that level of performance is proportionate to the portion of the Performance Period that has elapsed as of the date of the Change of Control.
(iv)For purposes of this Section 4(d), this Award will be considered assumed or replaced under the circumstances specified in Section 12(b)(1) of the Plan.
(e)Forfeiture of Unvested Units. To the extent any of Sections 4(a) through (d) is applicable to this Award, any Units that do not vest on the applicable vesting date as provided therein shall immediately be forfeited. If your employment terminates prior to the Scheduled Vesting Date under circumstances other than as set forth in Sections 4(b) through (d), all unvested Units shall immediately be forfeited.
5.Settlement of Units. As soon as practicable after any date on which Units vest (but no later than the 15th day of the third calendar month following the vesting date), the Company shall cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to the tax withholding provisions of Section 7 and compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this
PSU Agreement (2020 Equity Incentive Plan) | Page 3 |
Agreement, and all fees and expenses incurred by it in connection therewith. If the Units that vest include a fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to issuance of Shares as provided herein.
6.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on the date this Award vests pursuant to Section 4 above, a Total Dividend Equivalent amount will be credited to your performance stock unit account and shall be deemed reinvested in additional Units (“Dividend Equivalent Units”). The Total Dividend Equivalent amount will be determined by multiplying the number of underlying Units determined to have vested by the per share amount of each cash dividend paid on the Company’s common stock with a record date and payment date occurring between the Grant Date and the applicable vesting date, and adding those products together. Each of those products is referred to as a “Dividend Equivalent Amount.” The number of Dividend Equivalent Units to be credited to your performance stock unit account pursuant to this deemed reinvestment will be determined by dividing each Dividend Equivalent Amount by the Fair Market Value of a share of the Company’s common stock on the applicable dividend payment date, and adding those quotients together. Any Dividend Equivalent Units so credited will be fully vested and subject to settlement with the underlying Units as provided in Section 5 above.
7.Tax Consequences and Withholding. No Shares will be delivered to you in settlement of vested Units unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the delivery of the Shares. You hereby authorize the Company (or any Affiliate) to withhold from payroll or other amounts payable to you any sums required to satisfy such withholding tax obligations, and otherwise agree to satisfy such obligations in accordance with the provisions of Section 14 of the Plan. You may elect to satisfy such withholding tax obligations by having the Company withhold a number of Shares that would otherwise be issued to you in settlement of the Units and that have a fair market value equal to the amount of such withholding tax obligations by notifying the Company of such election prior to the Vesting Date.
8.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Executive Chairman, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, [email protected], and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
9.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of
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Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the SEC or any national securities exchange on which the Stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.
(h)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Performance Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
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Exhibit 10.6
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Restricted Stock Unit Award Agreement
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Restricted Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Restricted Stock Unit Award Agreement (the “Agreement”), consisting of this cover page and the Terms and Conditions on the following pages, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant:DAVID MORADI | |
Number of Restricted Stock Units:58,000 | Grant Date:May 4, 2026 |
Vesting Schedule: | |
| |
Scheduled Vesting Dates 9,667 14,500 14,500 14,500 4,833 | Number of Restricted Stock Units that Vest June 30, 2026 September 30, 2026 December 31, 2026 March 31, 2027 May 4, 2027 |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Restricted Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
/s/ David Moradi | | By: | /s/ Kelly Georgevich |
Print: David Moradi | | Title: | Chief Executive Officer |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Restricted Stock Unit Award Agreement
Terms and Conditions
1.Grant of Restricted Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions in this Agreement and the Plan, of the number of Restricted Stock Units specified on the cover page of this Agreement (the “Units”). Each Unit represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to an account in your name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to this Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect. The Units and your right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in Section 5 until satisfaction of the vesting conditions set forth in Section 4.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to you upon settlement of the Units as provided in Section 6.
4.Vesting of Units. For purposes of this Agreement, “Vesting Date” means any date, including the Scheduled Vesting Dates specified in the Vesting Schedule on the cover page of this Agreement, on which Units subject to this Agreement vest as provided in this Section 4.
(a)Scheduled Vesting. If you remain a Service Provider continuously from the Grant Date specified on the cover page of this Agreement, then the Units will vest in the amounts and on the Scheduled Vesting Dates specified in the Vesting Schedule.
(b)Accelerated or Continued Vesting. The vesting of outstanding Units will be accelerated or continued under the circumstances provided below:
(1)Death. If your Service terminates prior to the final Scheduled Vesting Date due to your death, then all of the unvested Units shall vest as of such termination date.
(2)Disability. If your Service terminates prior to the final Scheduled Vesting Date due to your Disability, then a pro rata portion (based on the number of days during which you were a Service Provider since the most recent Scheduled Vesting Date (or since the Grant Date if there was no previous Scheduled Vesting Date) as a percentage of 365) of the Units scheduled to vest as of the next Scheduled Vesting Date shall vest as of such termination date.
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(3)Termination without Cause. If your Service terminates prior to the final Scheduled Vesting Date due to your termination by the Company without Cause (as defined in the Second Amended and Restated Employment Agreement, dated as of May 4, 2026, between you and the Company (the “Employment Agreement”), then all of the unvested Units shall vest as of such termination date.
(4)Change in Control. If a Change in Control occurs while you continue to be a Service Provider and prior to the final Scheduled Vesting Date, the following provisions shall apply:
(i)If there is a Change in Control that involves a Corporate Transaction, then all of the unvested Units shall vest immediately prior to the effective time of such Change in Control.
(ii)If, within 12 months after a Change in Control described in paragraphs (1) or (2) of Section 2(g) of the Plan, you cease to be a Service Provider due either to an involuntary termination for reasons other than Cause (as defined in the Employment Agreement) or a resignation for Good Reason, then all unvested Units shall immediately vest in full.
5.Effect of Termination of Service. Except as otherwise provided in accordance with Section 4(b) above, if you cease to be a Service Provider, you will forfeit all unvested Units.
6.Settlement of Units. After any Units vest pursuant to Section 4, the Company shall, as soon as practicable (but no later than the 15th day of the third calendar month following the Vesting Date), cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to the tax withholding provisions of Section 8 and compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this Agreement, and all fees and expenses incurred by it in connection therewith.
7.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on each dividend payment date a dividend equivalent dollar amount equal to the number of Units credited to your account pursuant to this Agreement as of the dividend record date times the dollar amount of the cash dividend per Share shall be deemed reinvested in additional Units as of the dividend payment date and such additional Units shall be credited to your account. The number of additional Units so credited shall be determined based on the Fair Market Value of a Share on the dividend payment date. Any additional Units so credited will be subject to the same terms and conditions, including the timing of vesting and settlement, applicable to the underlying Units to which the dividend equivalents relate.
8.Tax Consequences and Withholding. You shall be required to pay to the Company, and no Shares will be delivered to you in settlement of vested Units, unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the delivery of the Shares. The Company will withhold a number of Shares that
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would otherwise be issued to you in settlement of the Units and that have a fair market value equal to the amount of such withholding tax obligations.
9.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Chief Executive Officer, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, [email protected], and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
10.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the SEC or any national securities
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exchange on which the Common Stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.
(h)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Restricted Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
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Exhibit 10.7
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Performance Stock Unit Agreement
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Performance Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Performance Stock Unit Agreement (the “Agreement”), consisting of this cover page, the Terms and Conditions on the following pages and the attached Exhibit A, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant: | David Moradi |
Target Number of Performance Stock Units: | 69,600 |
Maximum Number of Performance Stock Units: | 69,600 |
Grant Date: | May 4, 2026 |
Performance Period: | With respect to 50,267 PSUs, January 1, 2026 – December 31, 2026 (the “2026 Performance Period”) With respect to 19,333 PSUs, January 1, 2027 – December 31, 2027 (the “2027 Performance Period”) |
Vesting Schedule: | The number of Units determined in accordance with Exhibit A to have been earned as of the end of the applicable Performance Period will vest* on the date the Company’s Compensation Committee certifies such performance results, which shall be no later than March 10 of the calendar year immediately following the calendar year during which the applicable Performance Period ended , subject to earlier vesting or termination as provided in the attached Terms and Conditions |
Performance Goals: | See Exhibit A |
* Assumes your Service has been continuous from the Grant Date to the vesting date. | |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Performance Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
/s/ David Moradi | | By: | /s/ Kelly Georgevich |
Print: David Moradi | | Title: | Chief Executive Officer |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Performance Stock Unit Agreement
Terms and Conditions
1.Award of Performance Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions of this Agreement and the Plan, of an award of Performance Stock Units (the “Units”) in an amount initially equal to the Target Number of Performance Stock Units specified on the cover page of this Agreement. The number of Units that may actually be earned and become eligible to vest pursuant to this Award can be between 0% and 100% of the Target Number of Units, but may not exceed the Maximum Number of Performance Stock Units specified on the cover page of this Agreement. Each Unit that is earned as a result of the performance goals specified in Exhibit A to this Agreement having been satisfied and which thereafter vests represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to a performance stock unit account in your name maintained by the Company. This account will be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to the Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect. The Units and your right to receive Shares in settlement of any Units under this Agreement shall be subject to forfeiture except to extent the Units have been earned and thereafter vest as provided in Sections 4 and 5.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with any Units granted or earned pursuant to this Agreement unless and until Shares are issued to you in settlement of earned and vested Units as provided in Section 5.
4.Vesting and Forfeiture of Units. The Units shall vest at the earliest of the following times and to the degree specified.
(a)Scheduled Vesting. The number of Units that have been earned during each Performance Period, as determined by the Committee in accordance with Exhibit A, will vest on the applicable Scheduled Vesting Date, so long as your Service has been continuous from the Grant Date to the Scheduled Vesting Date, except as otherwise provided herein. For these purposes, the “Scheduled Vesting Date” means the date the Committee certifies (i) the degree to which the applicable performance goals for the applicable Performance Period have been satisfied, and (ii) the number of Units that have been earned during the applicable Performance Period as determined in accordance Exhibit A, which certification shall occur no later than March 10 of the calendar year immediately following the calendar year during which the Performance Period ended.
(b)Disability. If your Service terminates by reason of your Disability prior to a Scheduled Vesting Date, then you will be entitled to have vest on the Scheduled Vesting Date a pro rata portion of the Units that would otherwise have been determined to have been earned during the Performance Period in accordance with Exhibit A if your Service had been continuous until the Scheduled Vesting Date. The pro rata portion shall be determined by multiplying the number of Units that would otherwise have been determined to have been
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earned by a fraction whose numerator is the number of days during the Performance Period prior to your employment termination date and whose denominator is the number of days in the Performance Period.
(c)Death. If your Service terminates by reason of your death prior to a Scheduled Vesting Date, then you will be entitled to have vest on the date your Service terminates a pro rata portion of the Target Number of Units specified on the cover page of this Agreement. The pro rata portion shall be determined in the same manner as provided in Section 4(b) above.
(d)Change in Control. If a Change in Control occurs while you continue to be a Service Provider and prior to the final Scheduled Vesting Date, the following provisions shall apply:
(i)If, within 12 months after a Change of Control (A) described in paragraphs (1) or (2) of Section 2(g) of the Plan or (B) that constitutes a Corporate Transaction as defined in paragraph (3) of Section 2(g) of the Plan and in connection with which the surviving or acquiring entity (or its parent entity) has continued, assumed or replaced this Award, you cease to be a Service Provider due either to an involuntary termination for reasons other than Cause or a resignation for Good Reason, then the Units shall be deemed to have been earned and vested as of such termination date to the degree and in the manner provided in Section 4(d)(iii).
(ii)If this Award is not continued, assumed or replaced in connection with a Change in Control that constitutes a Corporate Transaction, then the Units shall be deemed to have been earned and vested immediately prior to the effective time of the Corporate Transaction to the degree and in the manner provided in Section 4(d)(iii).
(iii)The number of Units that would be deemed earned and vested pursuant to Section 4(d)(i) and Section 4(d)(ii) will be equal to the number of Units if the performance goals are deemed to have been satisfied at the target level of performance and the vested portion of the Units at that level of performance is proportionate to the portion of the Performance Period that has elapsed as of the date of the Change in Control or the termination of Service, as applicable.
(iv)For purposes of this Section 4(d), this Award will be considered assumed or replaced under the circumstances specified in Section 12(b)(1) of the Plan.
(e)Forfeiture of Unvested Units. To the extent any of Sections 4(a) through (d) is applicable to this Award, any Units that do not vest on the applicable vesting date as provided therein shall immediately be forfeited. If your employment terminates prior to the Scheduled Vesting Date under circumstances other than as set forth in Sections 4(b) through (d), all unvested Units shall immediately be forfeited.
5.Settlement of Units. As soon as practicable after any date on which Units vest (but no later than the 15th day of the third calendar month following the vesting date), the Company shall cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to the tax withholding provisions of Section 7 and compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this Agreement, and all fees and expenses incurred by it in connection therewith. If the Units that vest include a
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fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to issuance of Shares as provided herein.
6.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on the date this Award vests pursuant to Section 4 above, a Total Dividend Equivalent amount will be credited to your performance stock unit account and shall be deemed reinvested in additional Units (“Dividend Equivalent Units”). The Total Dividend Equivalent amount will be determined by multiplying the number of underlying Units determined to have vested by the per share amount of each cash dividend paid on the Company’s common stock with a record date and payment date occurring between the Grant Date and the applicable vesting date, and adding those products together. Each of those products is referred to as a “Dividend Equivalent Amount.” The number of Dividend Equivalent Units to be credited to your performance stock unit account pursuant to this deemed reinvestment will be determined by dividing each Dividend Equivalent Amount by the Fair Market Value of a share of the Company’s common stock on the applicable dividend payment date, and adding those quotients together. Any Dividend Equivalent Units so credited will be fully vested and subject to settlement with the underlying Units as provided in Section 5 above.
7.Tax Consequences and Withholding. You shall be required to pay to the Company, and no Shares will be delivered to you in settlement of vested Units, unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the delivery of the Shares. The Company shall satisfy any federal, state, local or foreign tax withholding obligation by withholding Shares from the Shares otherwise issuable or deliverable to you as a result of the settlement of vested Units at the minimum statutory withholding rate. The Shares used to satisfy such withholding obligations will be valued at the fair market value as of the date of such withholding.
8.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Chief Executive Officer, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, [email protected], and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
9.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this
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Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the SEC or any national securities exchange on which the Stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.
(h)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Performance Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
PSU Agreement (2020 Equity Incentive Plan) | Page 5 |
Exhibit 10.8
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Restricted Stock Unit Award Agreement
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Restricted Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Restricted Stock Unit Award Agreement (the “Agreement”), consisting of this cover page and the Terms and Conditions on the following pages, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant:[_______________________] | ||
Number of Restricted Stock Units:[______] | Grant Date:[ ________ ], 20 [ __ ] | |
Vesting Schedule: | ||
Scheduled Vesting Dates | Number of Restricted Stock Units that Vest | |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Restricted Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
| | By: | |
| | Title: | |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Restricted Stock Unit Award Agreement
Terms and Conditions
1.Grant of Restricted Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions in this Agreement and the Plan, of the number of Restricted Stock Units specified on the cover page of this Agreement (the “Units”). Each Unit represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to an account in your name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to this Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect. The Units and your right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in Section 5 until satisfaction of the vesting conditions set forth in Section 4.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to you upon settlement of the Units as provided in Section 6.
4.Vesting of Units. For purposes of this Agreement, “Vesting Date” means any date, including the Scheduled Vesting Dates specified in the Vesting Schedule on the cover page of this Agreement, on which Units subject to this Agreement vest as provided in this Section 4.
(a)Scheduled Vesting. If you remain a Service Provider continuously from the Grant Date specified on the cover page of this Agreement, then the Units will vest in the amounts and on the Scheduled Vesting Dates specified in the Vesting Schedule.
(b)Accelerated or Continued Vesting. The vesting of outstanding Units will be accelerated or continued under the circumstances provided below:
(1)Death. If your Service terminates prior to the final Scheduled Vesting Date due to your death, then all of the unvested Units shall vest as of such termination date.
(2)Disability. If your Service terminates prior to the final Scheduled Vesting Date due to your Disability, then a pro rata portion (based on the number of days during which you were a Service Provider since the most recent Scheduled Vesting Date (or since the Grant Date if there was no previous Scheduled Vesting Date) as a percentage of 365) of the Units scheduled to vest as of the next Scheduled Vesting Date shall vest as of such termination date.
RSU Agreement (2020 Equity Incentive Plan) | Page 2 |
(3)Change in Control. If a Change in Control occurs while you continue to be a Service Provider and prior to the final Scheduled Vesting Date, the following provisions shall apply:
(i)If, within 12 months after a Change of Control (A) described in paragraphs (1) or (2) of Section 2(g) of the Plan or (B) that constitutes a Corporate Transaction as defined in paragraph (3) of Section 2(g) of the Plan and in connection with which the surviving or acquiring entity (or its parent entity) has continued, assumed or replaced this Award, you cease to be a Service Provider due either to an involuntary termination for reasons other than Cause or a resignation for Good Reason, then all unvested Units shall immediately vest in full.
(ii)If this Award is not continued, assumed or replaced in connection with a Change in Control that constitutes a Corporate Transaction, then all unvested Units shall immediately vest in full upon the occurrence of the Change in Control.
(iii)For purposes of this Section 4(b)(3), this Award will be considered assumed or replaced under the circumstances specified in Section 12(b)(1) of the Plan.
5.Effect of Termination of Service. Except as otherwise provided in accordance with Section 4(b) above, if you cease to be a Service Provider, you will forfeit all unvested Units.
6.Settlement of Units. After any Units vest pursuant to Section 4, the Company shall, as soon as practicable (but no later than the 15th day of the third calendar month following the Vesting Date), cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to the tax withholding provisions of Section 8 and compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this Agreement, and all fees and expenses incurred by it in connection therewith.
7.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on each dividend payment date, a dividend equivalent dollar amount shall be credited to your account. The dollar amount of the dividend equivalents credited on each dividend payment date shall be equal to the number of Units credited to your account pursuant to this Agreement as of the dividend record date times the dollar amount of the cash dividend per Share. Your right to receive such accrued dividend equivalents shall vest, and the amount of the accrued dividend equivalents shall be paid in cash, to the same extent and at the same time as the underlying Units to which the dividend equivalents relate vest and are settled, as provided in this Agreement. No interest shall accrue on any unpaid dividend equivalents. Any dividend equivalents accrued on Units that are forfeited in accordance with this Agreement shall also be forfeited.
8.Tax Consequences and Withholding. No Shares will be delivered to you in settlement of vested Units unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the delivery of the Shares. You hereby authorize the Company (or any Affiliate) to withhold from payroll or other amounts payable to you any sums required to satisfy such withholding tax obligations, and otherwise agree to satisfy such
RSU Agreement (2020 Equity Incentive Plan) | Page 3 |
obligations in accordance with the provisions of Section 14 of the Plan. You may elect to satisfy such withholding tax obligations by having the Company withhold a number of Shares that would otherwise be issued to you in settlement of the Units and that have a fair market value equal to the amount of such withholding tax obligations by notifying the Company of such election prior to the Vesting Date.
9.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Chief Executive Officer, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, [e-mail address], and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
10.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by
RSU Agreement (2020 Equity Incentive Plan) | Page 4 |
the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the SEC or any national securities exchange on which the Common Stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.
(h)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Restricted Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
RSU Agreement (2020 Equity Incentive Plan) | Page 5 |
Exhibit 10.9
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Restricted Stock Unit Agreement
(Non-Employee Director Annual Awards)
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Restricted Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Restricted Stock Unit Award Agreement (the “Agreement”), consisting of this cover page and the Terms and Conditions on the following pages, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant: | ||
Number of Units: | Grant Date: | |
Vesting Schedule: | ||
Scheduled Vesting Date On the earlier of (a) one year following the Grant Date or (b) immediately prior to the next annual meeting of stockholders following the Grant Date | Percentage of Units That Vest 100% | |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Restricted Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
| | By: | |
| | Title: | |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Restricted Stock Unit Award Agreement
Terms and Conditions
1.Grant of Restricted Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions in this Agreement and the Plan, of the number of Restricted Stock Units specified on the cover page of this Agreement (the “Units”). Each Unit represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to an account in your name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to this Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to you upon settlement of the Units as provided in Section 5.
4.Vesting of Units. For purposes of this Agreement, “Vesting Date” means any date, including the Scheduled Vesting Date specified in the Vesting Schedule on the cover page of this Agreement, on which Units subject to this Agreement vest as provided in this Section 4.
(a)Scheduled Vesting. If you remain a Service Provider continuously from the Grant Date specified on the cover page of this Agreement, then the Units will vest in the amount and on the Scheduled Vesting Date specified in the Vesting Schedule.
(b)Accelerated or Continued Vesting. The vesting of outstanding Units will be accelerated or continued under the circumstances provided below:
(1)Death. If your Service terminates prior to the final Scheduled Vesting Date due to your death, then all of the unvested Units shall vest as of such termination date.
(2)Disability. If your Service terminates prior to the final Scheduled Vesting Date due to your Disability, then a pro rata portion (based on the number of days during which you were a Service Provider since the most recent Scheduled Vesting Date (or since the Grant Date if there was no previous Scheduled Vesting Date) as a percentage of 365) of the Units scheduled to vest as of the next Scheduled Vesting Date shall vest as of such termination date.
(3)Change in Control. If a Change in Control occurs while you continue to be a Service Provider and prior to the Scheduled Vesting Date, the following provisions shall apply:
Page 2
(i)If, within 12 months after a Change of Control (A) described in paragraphs (1) or (2) of Section 2(g) of the Plan or (B) that constitutes a Corporate Transaction as defined in paragraph (3) of Section 2(g) of the Plan and in connection with which the surviving or acquiring entity (or its parent entity) has continued, assumed or replaced this Award, you cease to be a Service Provider, then all unvested Units shall immediately vest in full.
(ii)If this Award is not continued, assumed or replaced in connection with a Change in Control that constitutes a Corporate Transaction, then all unvested Units shall immediately vest in full upon the occurrence of the Change in Control.
(iii)For purposes of this Section 4(b)(3), this Award will be considered assumed or replaced under the circumstances specified in Section 12(b)(1) of the Plan.
Except as otherwise provided in accordance with Section 4(b) above, if you cease to be a Service Provider, you will forfeit all unvested Units.
5.Settlement of Units. After any Units vest pursuant to Section 4, the Company shall, as soon as practicable (but no later than the 15th day of the third calendar month following the Vesting Date), cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this Agreement, and all fees and expenses incurred by it in connection therewith.
6.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on each dividend payment date, a dividend equivalent dollar amount shall be credited to your account. The dollar amount of the dividend equivalents credited on each dividend payment date shall be equal to the number of Units credited to your account pursuant to this Agreement as of the dividend record date times the dollar amount of the cash dividend per Share. Your right to receive such accrued dividend equivalents shall vest, and the amount of the accrued dividend equivalents shall be paid in cash, to the same extent and at the same time as the underlying Units to which the dividend equivalents relate vest and are settled, as provided in this Agreement. No interest shall accrue on any unpaid dividend equivalents. Any dividend equivalents accrued on Units that are forfeited in accordance with this Agreement shall also be forfeited.
7.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Chief Executive Officer, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, [e-mail address], and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
8.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
Page 3
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Restricted Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
Page 4
Exhibit 10.10
AUDIOEYE, INC.
2020 EQUITY INCENTIVE PLAN
Performance Stock Unit Agreement
AudioEye, Inc. (the “Company”), pursuant to its 2020 Equity Incentive Plan (the “Plan”), hereby grants an award of Performance Stock Units to you, the Participant named below. The terms and conditions of this Award are set forth in this Performance Stock Unit Agreement (the “Agreement”), consisting of this cover page, the Terms and Conditions on the following pages and the attached Exhibit A, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is used but not defined in this Agreement shall have the meaning assigned to it in the Plan as it currently exists or as it is amended in the future.
Name of Participant: | | |
Target Number of Performance Stock Units: | | |
Maximum Number of Performance Stock Units: | | |
Grant Date: | | |
Performance Period: | | |
Vesting Schedule: | The number of Units determined in accordance with Exhibit A to have been earned as of the end of the Performance Period will vest* [on the date the Company’s Compensation Committee certifies such performance results, which shall be no later than [_____]] [on ___________], subject to earlier vesting or termination as provided in the attached Terms and Conditions | |
Performance Goals: | See Exhibit A | |
* Assumes your Service has been continuous from the Grant Date to the vesting date. | | |
By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding this Award of Performance Stock Units.
PARTICIPANT: | | AUDIOEYE, INC. | |
| | | |
| | By: | |
| | Title: | |
AUDIOEYE, INC.
2020 Equity Incentive Plan
Performance Stock Unit Agreement
Terms and Conditions
1.Award of Performance Stock Units. The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions of this Agreement and the Plan, of an award of Performance Stock Units (the “Units”) in an amount initially equal to the Target Number of Performance Stock Units specified on the cover page of this Agreement. The number of Units that may actually be earned and become eligible to vest pursuant to this Award can be between 0% and [___]% of the Target Number of Units, but may not exceed the Maximum Number of Performance Stock Units specified on the cover page of this Agreement. Each Unit that is earned as a result of the performance goals specified in Exhibit A to this Agreement having been satisfied and which thereafter vests represents the right to receive one Share of the Company’s common stock. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to you will be credited to a performance stock unit account in your name maintained by the Company. This account will be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
2.Restrictions Applicable to Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered, voluntarily or involuntarily, other than (i) a transfer upon your death in accordance with your will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted in accordance with Section 6(d) of the Plan, or (ii) pursuant to a domestic relations order. Following any such transfer, this Award shall continue to be subject to the same terms and conditions that were applicable to the Award immediately prior to its transfer. Any attempted transfer in violation of this Section 2 shall be void and without effect. The Units and your right to receive Shares in settlement of any Units under this Agreement shall be subject to forfeiture except to extent the Units have been earned and thereafter vest as provided in Sections 4 and 5.
3.No Shareholder Rights. The Units subject to this Award do not entitle you to any rights of a holder of the Company’s common stock. You will not have any of the rights of a shareholder of the Company in connection with any Units granted or earned pursuant to this Agreement unless and until Shares are issued to you in settlement of earned and vested Units as provided in Section 6.
4.Vesting and Forfeiture of Units. The Units shall vest at the earliest of the following times and to the degree specified.
(a)Scheduled Vesting. The number of Units that have been earned during the Performance Period, as determined by the Committee in accordance with Exhibit A, will vest on the Scheduled Vesting Date[s], so long as your Service has been continuous from the Grant Date to the Scheduled Vesting Date. For these purposes, the “Scheduled Vesting Date[s]” means [the date the Committee certifies (i) the degree to which the applicable performance goals for the Performance Period have been satisfied, and (ii) the number of Units that have been earned during the Performance Period as determined in accordance Exhibit A, which certification shall occur no later than March 10 of the calendar year immediately following the calendar year during which the Performance Period ended] [DESCRIBE OTHER VESTING PROVISIONS].
(b)Disability. If your Service terminates by reason of your Disability prior to the Scheduled Vesting Date, then you will be entitled to have vest on the Scheduled Vesting Date a pro rata portion of the Units that would otherwise have been determined to have been earned during the Performance Period in accordance with Exhibit A if your Service had been continuous until the Scheduled Vesting Date. The pro rata portion shall be determined by multiplying the number of Units that would otherwise have been determined to have been
PSU Agreement (2020 Equity Incentive Plan) | Page 2 |
earned by a fraction whose numerator is the number of days during the Performance Period prior to your employment termination date and whose denominator is the number of days in the Performance Period.
(c)Death. If your Service terminates by reason of your death prior to the Scheduled Vesting Date, then you will be entitled to have vest on the date your Service terminates a pro rata portion of the Target Number of Units specified on the cover page of this Agreement. The pro rata portion shall be determined in the same manner as provided in Section 4(b) above.
(d)Change in Control. If a Change in Control occurs while you continue to be a Service Provider and prior to the final Scheduled Vesting Date, the following provisions shall apply:
(i)If, within 12 months after a Change of Control (A) described in paragraphs (1) or (2) of Section 2(g) of the Plan or (B) that constitutes a Corporate Transaction as defined in paragraph (3) of Section 2(g) of the Plan and in connection with which the surviving or acquiring entity (or its parent entity) has continued, assumed or replaced this Award, you cease to be a Service Provider due either to an involuntary termination for reasons other than Cause or a resignation for Good Reason, then the Units shall be deemed to have been earned and vested as of such termination date to the degree and in the manner provided in Section 4(d)(iii).
(ii)If this Award is not continued, assumed or replaced in connection with a Change in Control that constitutes a Corporate Transaction, then he Units shall be deemed to have been earned and vested immediately prior to the effective time of the Corporate Transaction to the degree and in the manner provided in Section 4(d)(iii).
(iii)The number of Units that would be deemed earned and vested pursuant to Section 4(d)(i) and Section 4(d)(ii) will be equal to the number of Units if the performance goals are deemed to have been satisfied at the target level of performance and the vested portion of the Units at that level of performance is proportionate to the portion of the Performance Period that has elapsed as of the date of the Change in Control or the termination of Service, as applicable,
(iv)For purposes of this Section 4(d), this Award will be considered assumed or replaced under the circumstances specified in Section 12(b)(1) of the Plan.
(e)Forfeiture of Unvested Units. To the extent any of Sections 4(a) through (d) is applicable to this Award, any Units that do not vest on the applicable vesting date as provided therein shall immediately be forfeited. If your employment terminates prior to the Scheduled Vesting Date under circumstances other than as set forth in Sections 4(b) through (d), all unvested Units shall immediately be forfeited.
5.Settlement of Units. As soon as practicable after any date on which Units vest (but no later than the 15th day of the third calendar month following the vesting date), the Company shall cause to be issued and delivered to you (or to your personal representative or your designated beneficiary or estate in the event of your death, as applicable) one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate to you, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to you, or by the electronic delivery of the Shares to a brokerage account you designate, and shall be subject to the tax withholding provisions of Section 7 and compliance with all applicable legal requirements as provided in Section 16(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units. The Company will pay any original issue or transfer taxes with respect to the issue and transfer of Shares to you pursuant to this Agreement, and all fees and expenses incurred by it in connection therewith. If the Units that vest include a
PSU Agreement (2020 Equity Incentive Plan) | Page 3 |
fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to issuance of Shares as provided herein.
6.Dividend Equivalents. If the Company pays cash dividends on its Shares while any Units subject to this Agreement are outstanding, then on the date this Award vests pursuant to Section 4 above, a total dividend equivalent amount will be determined by multiplying the number of Units determined to have vested by the per share amount of each cash dividend paid on the Company’s common stock with a record date and payment date occurring between the Grant Date and the applicable vesting date, and adding those products together. The total dividend equivalent amount, net of any amount required to satisfy withholding tax obligations as provided in Section 7 of this Agreement, will be paid to you (or your permitted transferee) in cash at the time the vested Units are settled as provided in Section 5 of this Agreement.
7.Tax Consequences and Withholding. No Shares will be delivered to you in settlement of vested Units unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the delivery of the Shares. You hereby authorize the Company (or any Affiliate) to withhold from payroll or other amounts payable to you any sums required to satisfy such withholding tax obligations, and otherwise agree to satisfy such obligations in accordance with the provisions of Section 14 of the Plan. You may elect to satisfy such withholding tax obligations by having the Company withhold a number of Shares that would otherwise be issued to you in settlement of the Units and that have a fair market value equal to the amount of such withholding tax obligations by notifying the Company of such election prior to the Vesting Date.
8.Notices. Every notice or other communication relating to this Agreement shall be in writing and shall be mailed to or delivered (including electronically) to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided. Unless and until some other address is so designated, all notices or communications by you to the Company shall be mailed or delivered to the Company, to the attention of its Chief Executive Officer, at its office at 5210 E. Williams Circle, Suite 750, Tucson, Arizona 85711, [e-mail address], and all notices or communications by the Company to you may be given to you personally or may be mailed or, if you are still a Service Provider, emailed to you at the address indicated in the Company's records as your most recent mailing or email address.
9.Additional Provisions.
(a)No Right to Continued Service. This Agreement does not give you a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate your Service at any time and otherwise deal with you without regard to the effect it may have upon you under this Agreement.
(b)Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
(c)Governing Law. This Agreement, the parties’ performance hereunder, and the relationship between them shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.
(d)Severability. The provisions of this Agreement shall be severable and if any provision of this Agreement is found by any court to be unenforceable, in whole or in part, the remainder of this Agreement shall nevertheless be enforceable and binding on the parties. You also agree that any trier of fact may modify any invalid, overbroad or unenforceable provision of this Agreement so that such provision, as modified, is valid and
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enforceable under applicable law.
(e)Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
(f)Section 409A of the Code. The Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to either be exempt from or comply with Section 409A of the Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A of the Code. The provisions of this Award shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A of the Code yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.
(g)Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the SEC or any national securities exchange on which the Stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.
(h)Electronic Delivery and Acceptance. The Company may deliver any documents related to this Restricted Stock Unit Award by electronic means and request your acceptance of this Agreement by electronic means. You hereby consent to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.
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EXHIBIT A
PERFORMANCE GOALS
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Exhibit 31.1
CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kelly Georgevich, Principal Executive Officer of AudioEye, Inc. (the “Registrant”), certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2026 of AudioEye, Inc. (the “Quarterly Report”);
2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Quarterly Report;
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: August 13, 2026 | | By: | /s/ Kelly Georgevich | |
| | | Name: | Kelly Georgevich |
| | | Title: | Chief Executive Officer |
| | | | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Matthew Domeyer, Principal Financial Officer of AudioEye, Inc. (the “Registrant”), certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2026 of AudioEye, Inc. (the “Quarterly Report”);
2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Quarterly Report;
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and
(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date: August 13, 2026 | | By: | /s/ Matthew Domeyer | |
| | | Name: | Matthew Domeyer |
| | | Title: | Chief Financial Officer |
| | | | (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing by AudioEye, Inc. (the “Registrant”) of its Quarterly Report on Form 10-Q for the period ended June 30, 2026 (the “Quarterly Report”) with the Securities and Exchange Commission, we, Kelly Georgevich and Matthew Domeyer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:
(i) The Quarterly Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Date: August 13, 2026 | | By: | /s/ Kelly Georgevich | |
| | | Name: | Kelly Georgevich |
| | | Title: | Chief Executive Officer |
| | | | (Principal Executive Officer) |
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Date: August 13, 2026 | | By: | /s/ Matthew Domeyer | |
| | | Name: | Matthew Domeyer |
| | | Title: | Chief Financial Officer |
| | | | (Principal Financial Officer) |
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