Financial Performance - The company incurred a net loss of 95,746,000 as of the same date[44]. - The company has $5.7 million in cash as of December 31, 2024, and will require additional capital for future business development[46]. - The company has a history of generating significant losses and may not achieve consistent profitability in the future[44]. Competition and Market Risks - The company is subject to significant competition from larger, better-financed companies, which may impact its ability to achieve profitability[59]. - The company must navigate weakened global economic conditions that may impact its business and results[49]. - If the company fails to adapt to changing market conditions and customer requirements, it could lose customers and market share[80]. Strategic Opportunities and Acquisitions - The company may pursue strategic opportunities, including acquisitions, which could involve significant management resources and costs[52]. - The company acquired ADA Site Compliance on September 27, 2024, but faces risks in successfully integrating the business and achieving expected benefits[62]. - Expansion into new products and markets presents additional risks, including potential lower profitability and challenges in customer adoption[74]. Legal and Regulatory Risks - The company faces risks related to litigation, which could adversely affect its financial position and results of operations[50]. - The company may face increased legal proceedings related to intellectual property rights, which could adversely affect its financial condition and operations[69]. - The current legal environment remains unclear, and there is a risk of unintentional violations of laws that could impact the company's offerings[70]. - The company may face risks related to government contracts, including audits and potential penalties for violations[78]. Operational Risks - The company relies on its intellectual property rights for competitive advantage, but faces challenges in protecting these rights[63]. - The growth of online services, IoT, and next-generation applications is critical for the company's success, but there are risks that this growth may not occur as expected[71]. - System interruptions and lack of redundancy could lead to reduced net sales and negatively affect the attractiveness of the company's products and services[75]. - The company’s success is dependent on its employees, including senior management, and any delays in execution due to new personnel could impact business strategies[73]. Stockholder and Market Considerations - The company does not expect to pay dividends to common stockholders in the foreseeable future, affecting potential investor returns[93]. - The company has approximately 12,285,000 shares of common stock issued and outstanding as of December 31, 2024[108]. - The company has outstanding options to purchase an aggregate of approximately 36,000 shares of common stock and restricted stock units covering approximately 1,315,000 shares[108]. - As of January 31, 2025, directors and executive officers beneficially owned approximately 29% of the aggregate voting power of the company's outstanding shares[113]. - The company must maintain a minimum amount of stockholders' equity and a minimum number of holders of its securities to avoid delisting from the Nasdaq Capital Market[99]. - The company has historically experienced limited trading volume and significant price volatility, which may reduce liquidity[98]. - The company is subject to reporting obligations under the Securities Exchange Act of 1934, which places significant demands on its resources[112]. - The company may face substantial costs and management time consumption if it fails to maintain effective internal controls over financial reporting[97]. - The company’s common stock may be subject to delisting if it fails to meet the continuing listing criteria of the Nasdaq Capital Market[99]. - The issuance of additional shares may dilute existing stockholders' interests and reduce the market price of the common stock[110]. - The company’s stock price may decline if analysts publish unfavorable research or cease coverage[111].
AudioEye(AEYE) - 2024 Q4 - Annual Report