# Audioeye Inc: Form 10-Q for the period ended Jun 30, 2025

- Company: [Audioeye Inc](/companies/aeye.md) (CIK 1362190)
- Form: 10-Q
- Filed: 2025-08-08
- Accepted by EDGAR: Aug 8, 2025, 17:11 ET
- Period: 2025-06-30
- Accession: 0001558370-25-010934
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1362190/000155837025010934/aeye-20250630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1362190/000155837025010934/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $9.9m | us-gaap:Revenues |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $19.6m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $2.2m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $4.2m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $7.6m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $15.4m | us-gaap:GrossProfit |
| Research and development | 3 months, 2025-04-01 to 2025-06-30 | $1.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2025-01-01 to 2025-06-30 | $2.4m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $242.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | −$698.0k | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$2.0k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | −$1.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | −$0.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 12,418,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $1.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $23.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2025-01-01 to 2025-06-30 | $1.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-30 | $6.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $14.8m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $33.9m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $13.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-30 | $26.6m | us-gaap:Liabilities |
| Long-term debt | at 2025-06-30 | $12.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-06-30 | $168.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-06-30 | $7.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,527 characters.

*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 Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This cautionary note is applicable to all forward-looking statements contained in this report.

### 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 and mobile application and audit reporting services 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-four (24) issued patents in the United States and three (3) pending US 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, 2024 as filed with the SEC on March 12, 2025 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, 2025, we continued to focus on product innovation, expanding revenue and managing expenses.

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 our website and mobile application reporting services and PDF remediation services that provide non-recurring revenue.

In the six months ended June 30, 2025, total revenue increased by 18% over the prior year comparable period. As of June 30, 2025, Annual Recurring Revenue (“ARR”) was approximately $38.2 million, which represented an increase of 14% year-over-year. Refer to Other Key Operating Metrics below for details on how we calculate ARR.

As of June 30, 2025, AudioEye had approximately 120,000 customers, a 1% decrease from 121,000 customers at June 30, 2024. The decrease in customer count was attributable to a contract renegotiation within our Partner and Marketplace channel.

In the six months ended June 30, 2025, revenue from our Partner and Marketplace channel grew 13% over the prior year comparable period. This channel represented about 57% of ARR as of June 30, 2025. In six months ended June 30, 2025, total Enterprise channel revenue grew 27% over the prior year comparable period. The Enterprise channel represented about 43% of ARR as of June 30, 2025.

We had one customer (including the customer’s affiliates reflecting multiple contracts and a partnership with the Company) which accounted for approximately 13 % and 14% of our total revenue in the three and six months ended June 30, 2025, respectively.

The Company continued to invest in research and development in the second quarter of 2025. Total research and development cost, as defined under Research and Development Expenses section in the Results of Operations below, was 17% of total revenue in the six months ended June 30, 2025. Total research and development cost decreased from the prior year comparable period primarily due to lower personnel cost.

In the six months ended June 30, 2025, selling and marketing expense increased from the prior year comparable period. This increase was mainly driven by higher third-party marketing expense. The increase in general and administrative expenses in the six months ended

June 30, 2025 was due primarily to an increase in litigation expenses and higher amortization expense associated with our intangible assets.

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, 2025 with the three and six months ended June 30, 2024.

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 up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- | --- | ---: |
| Revenue | ​ | $9,857 | ​ | $8,470 | ​ | $1,387 | ​ | 16% |
| Cost of revenue | ​ | 2,238 | ​ | ​ 1,764 | ​ | ​ 474 | ​ | 27% |
| Gross profit | ​ | 7,619 | ​ | ​ 6,706 | ​ | ​ 913 | ​ | 14% |
| Operating expenses: | ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Selling and marketing | ​ | 3,806 | ​ | ​ 2,971 | ​ | ​ 835 | ​ | 28% |
| Research and development | ​ | 1,200 | ​ | ​ 1,221 | ​ | ​ (21) | ​ | (2)% |
| General and administrative | ​ | 3,731 | ​ | ​ 3,011 | ​ | ​ 720 | ​ | 24% |
| Change in fair value of contingent consideration | ​ | (1,360) | ​ | ​ — | ​ | ​ (1,360) | ​ | 100% |
| Total operating expenses | ​ | 7,377 | ​ | ​ 7,203 | ​ | ​ 174 | ​ | 2% |
| Operating income (loss) | ​ | 242 | ​ | ​ (497) | ​ | ​ 739 | ​ | (149)% |
| Interest expense, net | ​ | (244) | ​ | ​ (238) | ​ | ​ (6) | ​ | 3% |
| Net loss | ​ | $(2) | ​ | $(735) | ​ | $733 | ​ | (100)% |

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $19,590 | ​ | $16,553 | ​ | $3,037 | ​ | 18% |
| Cost of revenue | ​ | 4,233 | ​ | 3,525 | ​ | 708 | ​ | 20% |
| Gross profit | ​ | 15,357 | ​ | 13,028 | ​ | 2,329 | ​ | 18% |
| Operating expenses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ ​ |
| Selling and marketing | ​ | 7,520 | ​ | 5,974 | ​ | 1,546 | ​ | 26% |
| Research and development | ​ | 2,353 | ​ | 2,543 | ​ | (190) | ​ | (7)% |
| General and administrative | ​ | 7,492 | ​ | 5,651 | ​ | 1,841 | ​ | 33% |
| Change in fair value of contingent consideration | ​ | (1,310) | ​ | (12) | ​ | (1,298) | ​ | 10,817% |
| Total operating expenses | ​ | 16,055 | ​ | 14,156 | ​ | 1,899 | ​ | 13% |
| Operating loss | ​ | (698) | ​ | (1,128) | ​ | 430 | ​ | (38)% |
| Other expense: | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest expense, net | ​ | ​ (473) | ​ | ​ (436) | ​ | ​ (37) | ​ | 8% |
| Loss on extinguishment of debt | ​ | ​ (300) | ​ | ​ — | ​ | ​ (300) | ​ | 100% |
| Total other expense | ​ | ​ (773) | ​ | ​ (436) | ​ | ​ (337) | ​ | 77% |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Net loss | ​ | $(1,471) | ​ | $(1,564) | ​ | $93 | ​ | (6)% |

#### Revenue

The following table presents our revenues disaggregated by sales channel:

*(in thousands)*

| ​ ​ | ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Partner and Marketplace | ​ | $5,399 | ​ | $4,970 | ​ | $429 | ​ | 9% |
| Enterprise | ​ | 4,458 | ​ | ​ 3,500 | ​ | ​ 958 | ​ | 27% |
| Total revenues | ​ | $9,857 | ​ | $8,470 | ​ | $1,387 | ​ | 16% |

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $​% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Partner and Marketplace | ​ | $10,919 | ​ | $9,704 | ​ | $1,215 | ​ | 13% |
| Enterprise | ​ | 8,671 | ​ | 6,849 | ​ | 1,822 | ​ | 27% |
| Total revenue | ​ | $19,590 | ​ | $16,553 | ​ | $3,037 | ​ | 18% |

The Partner and Marketplace channel consists of our 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 the three and six months ended June 30, 2025, total revenue increased by 16% and 18%, respectively, over the prior year comparable periods. The increase in Partner and Marketplace channel revenue for the three and six months ended June 30, 2025 was primarily due to continued expansion with existing partners. The increase in Enterprise channel revenue for the three and six months ended June 30, 2025 was driven primarily by an increase in Enterprise customers.

#### Cost of Revenue and Gross Profit

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $9,857 | ​ | $8,470 | ​ | $1,387 | ​ | 16% |
| Cost of Revenue | ​ | 2,238 | ​ | ​ 1,764 | ​ | ​ 474 | ​ | 27% |
| Gross profit | ​ | $7,619 | ​ | $6,706 | ​ | $913 | ​ | 14% |

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, ​ 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Revenue | ​ | $19,590 | ​ | $16,553 | ​ | $3,037 | ​ | 18% |
| Cost of Revenue | ​ | 4,233 | ​ | 3,525 | ​ | 708 | ​ | 20% |
| Gross profit | ​ | $15,357 | ​ | $13,028 | ​ | $2,329 | ​ | 18% |

Cost of revenue consists primarily of compensation and related benefits costs for our customer experience 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, 2025, cost of revenue increased by 27% and 20%, respectively, over the prior year comparable periods. The increase in cost of revenue for each period was primarily due to increased costs incurred for service delivery, additional costs attributable to business and asset acquisitions, and higher amortization expense related to our capitalized software development costs.

For the three and six months ended June 30, 2025, gross profit increased by 14% and 18%, respectively, over the prior year comparable periods. The increase in gross profit for each period was a result of increased revenue.

#### Selling and Marketing Expenses

*(in thousands)*

| ​ ​ | ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Selling and marketing | ​ | $3,806 | ​ | $2,971 | ​ | $835 | ​ | 28% |

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Selling and marketing | ​ | $7,520 | ​ | $5,974 | ​ | $1,546 | ​ | 26% |

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 and six months ended June 30, 2025, selling and marketing expenses increased by 28% and 26%, respectively, over the prior year comparable periods. The increase in selling and marketing expenses for each period resulted primarily from higher third-party marketing expenses, additional costs associated with business and asset acquisitions, and higher personnel costs.

#### Research and Development Expenses

*(in thousands)*

| ​ ​ | ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Research and development expense | ​ | $1,200 | ​ | $1,221 | ​ | $(21) | ​ | (2)% |
| Plus: Capitalized research and development cost | ​ | 506 | ​ | ​ 457 | ​ | ​ 49 | ​ | 11% |
| Total research and development cost | ​ | $1,706 | ​ | $1,678 | ​ | $28 | ​ | 2% |

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Research and development expense | ​ | $2,353 | ​ | $2,543 | ​ | $(190) | ​ | (7)% |
| Plus: Capitalized research and development cost | ​ | 978 | ​ | 947 | ​ | 31 | ​ | 3% |
| Total research and development cost | ​ | $3,331 | ​ | 3,490 | ​ | $(159) | ​ | (5)% |

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, 2025, R&D expenses decreased by 2% and 7%, respectively, from the prior year comparable periods. The decrease for each period was driven by lower personnel cost. For the three and six months ended June 30, 2025, capitalized R&D cost increased by 11% and 3%, respectively, over the prior year comparable periods due to engineering personnel spending more time on product development than in the prior year comparable periods. For the three months ended June 30, 2025, total R&D cost, which includes both R&D expenses and capitalized R&D costs, increased by 2% from the prior year comparable period. For the six months ended June 30, 2025, total R&D cost decreased by 5% from the prior year comparable period.

#### General and Administrative Expenses

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| General and administrative | ​ | $3,731 | ​ | $3,011 | ​ | $720 | ​ | 24% |

*(in thousands)*

| ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| General and administrative | ​ | $7,492 | ​ | $5,651 | ​ | $1,841 | ​ | 33% |

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, 2025, general and administrative expenses increased by 24% and 33%, respectively, over the prior year comparable periods. The increase in general and administrative expense for each period was due primarily to an increase in litigation expense by $213,000 and $830,000 for the three and six months ended June 30, 2025, respectively, as well as higher personnel cost and amortization expense associated with our intangible assets.

#### Change in Fair Value of Contingent Consideration

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Change in fair value of contingent consideration | ​ | $(1,360) | ​ | $— | ​ | $(1,360) | ​ | 100% |

*(in thousands)*

| ​ ​ | ​ ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ ​ | ​ ​ Change $% | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Change in fair value of contingent consideration | ​ | $(1,310) | ​ | $(12) | ​ | $(1,298) | ​ | 10,817% |

Change in fair value of contingent consideration consists of non-cash valuation adjustments to contingent consideration liabilities recognized in connection with a business combination or an asset acquisition.

For the three and six months ended June 30, 2025, the change in fair value of contingent consideration was due to a reduction in the estimated earnout payable in connection with the acquisition of ADA Site Compliance in the third quarter of 2024.

#### Interest Expense

*(in thousands)*

| ​ ​ | ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Interest expense, net | ​ | $(244) | ​ | $(238) | ​ | $(6) | ​ | 3% |

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Interest expense, net | ​ | $(473) | ​ | $(436) | ​ | $(37) | ​ | 8% |

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, 2025, interest expense, net increased by 3% and 8%, respectively, over the prior year comparable periods. The increase in interest expense, net for each period was primarily attributable to a reduction in interest income from investment in money market funds.

#### Loss on Extinguishment of Debt

*(in thousands)*

| ​ ​ | ​ | ​ ​ Three months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Loss on extinguishment of debt | ​ | $— | ​ | $— | ​ | $— | ​ | —% |

*(in thousands)*

| ​ ​ | ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ | ​ ​ Change $% | ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| 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 six months ended June 30, 2025, in connection with the termination of this term loan, we recognized a $300,000 loss on extinguishment of debt, which included $144,000 in prepayment and other fees and the unamortized portion of related debt discount and debt issuance costs.

### 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 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, 2025, ARR was $38.2 million, which represents an increase of 14% 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, 2025 | ​ | ​ ​ December 31, 2024 | ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Current assets | ​ | $14,789 | ​ | $12,120 | ​ |
| Current liabilities | ​ | (13,405) | ​ | (11,571) | ​ |
| Working capital | ​ | $1,384 | ​ | $549 | ​ |

As of June 30, 2025, we had $6,869,000 in cash and cash equivalents and working capital of $1,384,000. The $0.8 million increase in working capital in the six months ended June 30, 2025 was primarily due to the new credit facility with Western Alliance Bank, under which we have obtained $13.4 million in term loan advances and used a portion of the proceeds to pay our previous $7.0 million term loan with SG Credit Partners in full.

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, 2025, we used $1.76 million of the program to repurchase shares. As of June 30, 2025, we had $10.74 million remaining for the repurchase of shares.

As of June 30, 2025, we had $13.4 million outstanding under the term loan, $13.2 million of which is classified as noncurrent liability. The term loan matures on March 31, 2030, and has required quarterly principal payments due beginning on April 10, 2026.

As of August 8, 2025, 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

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ Six months ended June 30, 2025 | ​ | ​ ​ 2024 | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Net cash provided by operating activities |  | $1,171 | ​ | $613 | ​ |
| Net cash used in investing activities | ​ | (2,671) | ​ | (1,035) | ​ |
| Net cash provided by (used in) financing activities | ​ | 2,718 | ​ | (3,728) | ​ |
| Net increase (decrease) in cash and cash equivalents | ​ | $1,218 | ​ | $(4,150) | ​ |

For the six months ended June 30, 2025, in relation to the prior year comparable period, cash provided by operating activities increased primarily due to payments in the prior year period towards our contingent consideration associated with a business acquisition, of which $710,000 was classified as cash used in operating activities, whereas no payment of contingent consideration occurred in the current year period.

For the six months ended June 30, 2025, in relation to the prior year comparable period, cash used in investing activities increased primarily due to $1.7 million in net payments towards asset acquisitions.

For the six months ended June 30, 2025, in relation to the prior year comparable period, cash provided by financing activities increased primarily due to $13.4 million in proceeds from term loan borrowings under the new credit facility with Western Alliance Bank, which were partially offset by the repayment of our previous $7.0 million term loan. In addition, in the six months ended June 30, 2024, the Company paid $1.7 million to settle the contingent consideration associated with the acquisition of Bureau of Internet Accessibility Inc., whereas no such payment of contingent consideration occurred in the six months ended June 30, 2025.

### 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, 2024, relate to goodwill, intangible assets and contingent consideration recognized in connection with a business combination. 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, 2024.

## Controls and procedures

As filed, 2,510 characters.

### 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 Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (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 Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2025.

### Changes in Internal Controls over Financial Reporting

During the quarter ended June 30, 2025, there were no material changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 631 characters.

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, 2024 (“2024 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 2024 Form 10-K. The risks described in our 2024 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.

Filed Aug 8, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-010934. Last ingested by Listed: Nov 2, 2026, 18:45 ET. No prices; not investment advice.