A series of legal issues have erupted after Audioeye Inc (OTCMKTS:AEYE) warned of financial errors in its past quarterly results. The company published a note stating that the Audit Committee has identified errors in the previously filed financial statements. Resultantly, the financial statement pertaining to the quarters ended March 31, June 30 and September 30, 2014 will be restated.
Full of errors
The press release caused outrage among investors, who have started getting rid of the company’s shares. In addition, Audioeye Inc (OTCMKTS:AEYE) said that the Audit Committee has launched internal review and controls. Moreover, the company said that keeping in view the recent events it does not see it’s previously released financial statements or other data reliable. Also, Audioeye Inc (OTCMKTS:AEYE) has raised alert that the preliminary earnings released on January 12, 2015 in relation to its quarter and year ended December 31, 2014 should no longer be taken into consideration or given any importance.
Audioeye Inc (OTCMKTS:AEYE) briefed that it anticipates removing non-cash revenues that arose from the exchanges of the license of the company with that of its customer. Resultantly, the action will reduce the earlier reported license cash revenue substantially. The impact will be severe as the company’s non-cash revenue during the first nine months of 2014 stood at $8.1 million. Moreover, the reversal of such non-cash revenue will affect other heads such as Prepaid Assets, Amortization, etc. Meanwhile, the company is evaluating 2013 financial statements for any potential adjustment. In view of fixing these errors, Audioeye Inc (OTCMKTS:AEYE) notified that it might miss filing its Form 10-k on time.
Audioeye Inc (OTCMKTS:AEYE)’s financial mismanagement has irked the investors as the Rosen Law Firm has already announced an investigation into the company’s business affairs. As expected, the stock of the company fell by 25% to $0.305, and 82,038 shares were exchanged on the day.