AudioEye (AEYE) 10-Q7 Nov 142014 Q3 Quarterly reportFinancial data

Company Profile

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2014	Nov. 07, 2014
Document And Entity Information	'	'
Entity Registrant Name	'AUDIOEYE INC	'
Entity Central Index Key	'0001362190	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Current Reporting Status	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	70,602,753
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2014	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current Assets	'	'
Cash	$2,151,849	$1,847,004
Accounts receivable, net	695,744	569,297
Related party receivables	27,500	82,250
Prepaid assets and security deposits	5,189,330	'
Marketable securities	48,000	'
Total Current Assets	8,112,423	2,498,551
Property and equipment, net	1,450	3,847
Intangible assets, net	5,195,627	3,073,945
Goodwill	700,528	700,528
Total Assets	14,010,028	6,276,871
Current Liabilities	'	'
Accounts payable and accrued expenses	534,779	416,531
Notes and loans payable-current, net of unamortized discounts of $0 and $1,155, respectively	24,000	172,845
Related party payable	0	243,424
Related party loans	0	35,000
Total Current Liabilities	558,779	867,800
Long Term Liabilities	'	'
Notes and loans payable-long term	57,800	79,800
Total Long Term Liabilities	57,800	79,800
Total Liabilities	616,579	947,600
STOCKHOLDERS' EQUITY	'	'
Preferred stock, $0.00001 par value, 10,000,000 shares authorized, none issued and outstanding, as of September 30, 2014 and December 31, 2013	'	'
Common stock, $0.00001 par value, 250,000,000 shares authorized, 70,552,753 and 53,239,369 issued and outstanding, as of September 30, 2014 and December 31, 2013 respectively	705	532
Treasury stock	-623,000	-623,000
Additional paid-in capital	20,400,247	13,231,212
Accumulated deficit	-6,384,503	-7,279,473
Total Stockholders' Deficit	13,393,449	5,329,271
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$14,010,028	$6,276,871

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
CONSOLIDATED BALANCE SHEETS	'	'
Notes and loans payable-current, discount amount	$0	$1,155
Preferred Stock, par value (in dollars per share)	$0.00	$0.00
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value (in dollars per share)	$0.00	$0.00
Common Stock, shares authorized	250,000,000	250,000,000
Common Stock, shares issued	70,552,753	53,239,369
Common Stock, shares outstanding	70,552,753	53,239,369

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONSOLIDATED STATEMENTS OF OPERATIONS	'	'	'	'
Revenue	$4,836,286	$344,414	$8,877,955	$748,693
Revenue from related party	1,125	37,125	5,375	57,375
Total revenues	4,837,411	381,539	8,883,330	806,068
Cost of revenues	1,084,988	130,771	1,460,453	226,561
Gross profit	3,752,423	250,768	7,422,877	579,507
Operating expenses:	'	'	'	'
Selling and marketing	546,265	117,893	1,301,365	167,509
Research and development	153,188	'	391,958	'
General and administrative expenses	1,548,851	889,095	4,352,398	1,880,726
Amortization and depreciation	189,602	89,823	462,326	269,135
Total operating expenses	2,437,906	1,096,811	6,508,047	2,317,370
Operating income (loss)	1,314,517	-846,043	914,830	-1,737,863
Other income (expense)	'	'	'	'
Unrealized loss on marketable securities	-12,000	-9,000	-12,000	-18,000
Interest expense	-416	-15,767	-7,860	-40,933
Total other income (expense)	-12,416	-24,767	-19,860	-58,933
Net income (loss)	$1,302,101	($870,810)	$894,970	($1,796,796)
Net income (loss) per common share - basic	$0.02	($0.02)	$0.02	($0.04)
Net income (loss) per common share - diluted	$0.02	($0.02)	$0.01	($0.04)
Weighted average common shares outstanding - basic	61,062,150	44,385,177	55,993,097	41,668,724
Weighted average common shares outstanding - diluted	70,568,775	44,385,177	68,499,722	41,668,724

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	Sep. 30, 2014	Sep. 30, 2013
Cash Flows from Operating Activities:	'	'
Net loss	$894,970	($1,796,796)
Adjustments to reconcile net income (loss) to net cash used in operating activities:	'	'
Depreciation and amortization	462,326	269,135
Stock, option and warrant expense	1,538,557	593,019
Shares issued for services	778,927	50,000
Unrealized loss on marketable securities	12,000	18,000
Amortization of debt discount	1,155	'
Licenses sold in exchange for licenses	-2,025,000	'
Licenses sold in exchange for prepaid services	-6,075,000	'
Changes in operating assets and liabilities:	'	'
Accounts receivable	-186,447	-104,394
Related party receivable	54,750	-72,000
Prepaid and other assets	885,670	'
Accounts payable and accruals	139,762	146,857
Deferred revenue	'	-54,823
Related party payables	-243,424	274,583
Net cash used in operating activities	-3,761,754	-676,419
Cash Flows from Investing Activities:	'	'
Cash paid for intangible assets	-556,611	-9,890
Net cash used in investing activities	-556,611	-9,890
Cash Flows from Financing Activities:	'	'
Repayment of note payable	-172,000	-218,000
Repayment on related party loans	-35,000	'
Borrowings on debt	'	502,500
Issuance of common stock for cash, net of issuance costs	1,305,689	426,346
Proceeds from exercise of options and warrants, net of issuance costs	3,524,521	37,188
Net cash provided by financing activities	4,623,210	748,034
Net increase in cash	304,845	61,725
Cash - beginning of period	1,847,004	11,710
Cash - end of period	2,151,849	73,435
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	'	'
Interest paid	7,444	24,967
NON-CASH INVESTING AND FINANCING ACTIVITIES	'	'
Common stock issued for conversion of debt	'	1,709,291
Warrants issued for accrued payroll	21,514	1,073,751
Common stock issued for accounts payable	'	50,000
Accounts payable converted into debt	'	30,000
Debt discount for warrants issued with debt	'	6,930
Accounts receivable converted to marketable securities	$60,000	'

ORGANIZATION_AND_BASIS_OF_PRES

ORGANIZATION AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2014
ORGANIZATION AND BASIS OF PRESENTATION	'
ORGANIZATION AND BASIS OF PRESENTATION	'

	NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

	The accompanying unaudited consolidated interim financial statements of AudioEye, Inc. and its wholly-owned subsidiary (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2014.

	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. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2013 as reported in the Company’s Annual Report on Form 10-K have been omitted.

	Corporate Information and Background

	AudioEye, Inc. was formed as a Delaware corporation on May 20, 2005. The Company focuses on working to improve the mobility, usability and accessibility of all Internet-based content through the development, sale, licensing and use of its proprietary accessibility technologies. Audio Internet® is a technology that utilizes patented architecture to deliver a fully accessible audio equivalent of a visual website or mobile website in a compliant format that can be navigated, utilized, interacted with, and transacted from, without the use of a monitor or mouse, by individuals with visual impairments. For individuals with hearing impairments, Audio Internet® provides captioning for websites, and the challenges of reaching those with other impairments are also addressed by the technology platform.

	Complete with an ever-growing suite of utilities tailored to the needs of different disabled users, the AudioEye® Audio Internet® Accessibility Platform is a fully scalable cloud-based solution designed and developed to meet the needs and compliance mandates for an ever-growing demographic.

	Reclassification

	Certain prior year amounts have been reclassified to conform to the current year presentation.

	Revenue Recognition

	Revenue is recognized when all applicable recognition criteria have been met, which generally include: (a) persuasive evidence of an existing arrangement; (b) a fixed or determinable price; (c) delivery has occurred or service has been rendered; and (d) the collectability of the sales price is reasonably assured. For software and technology development contracts, where applicable, the Company recognizes revenues on a percentage of completion method based upon several factors including but not limited to: (a) an estimate of total hours and milestones to complete; (b) the total hours completed; (c) the delivery of services rendered; (d) the change in estimates; and (e) the collectability of the contract.

	Licensing revenues for intangible assets, including intellectual property such as patents and trademarks, are recognized when all of the following criteria have been met: (a) persuasive evidence of an existing arrangement; (b) a fixed or determinable price; (c) the delivery has occurred or service has been rendered; and (d) the collectability of the sales price is reasonably assured. Licensing revenues are recognized over the term of the contract or, in the case of a perpetual license, revenues are recognized in the period the criteria have been met. In transactions where the Company engages in a non-cash exchange of a license of the Company for the license of the Company’s customer, the Company follows Accounting Standards Codification (“ASC”) 985-605 and ASC 985-845-10. The licenses received from the Company’s customers are sold, licensed or leased in a different line of business from the Company license delivered to the Company’s customers in the exchange. The fair value of the technology or products exchanged or received is determined within reasonable limits and used to determine vendor-specific objective evidence with the purpose to enhance product offerings for the sale or license to third parties. The Company uses fair value guidance of the vendor-specific objective evidence of fair value (“VSOE”) under ASC 985-605. The contracts are then evaluted for commercial substance, including that the licenses received by the Company in the exchange are expected, at the time of the exchange, to be deployed and used by the software vendor and the value ascribed to the transaction reasonably reflects such expected use.

	In transactions where the Company engages in a non-cash exchange of a license of the Company for the services of the Company’s customer, the Company follows ASC 985-605 and ASC 985-845-10. The fair value of the technology or services exchanged or received is determined within reasonable limits and used to determine vendor-specific objective evidence. The Company uses fair value guidance of the VSOE under ASC 985-605. The revenue under these transactions is recognized upon delivery of the license and the services received in exchange are recognized as a prepaid asset that is amortized to expense as the services are received. The Company evaluates whether the period over which the services are received requires treatment as extended payment terms under ASC 985-605-25-33 and the Company evaluates the collectibility of the services to be received under ASC 985-605.

	For the three and nine months ended September 30, 2014, the Company sold an aggregate of nineteen and thirty-six licenses, respectively, with a fair value of $225,000 per license, in exchange for either a license to their intellectual property or prepaid services. The licenses exchanged were determined to meet the aforementioned criteria. During the three and nine months ended September 30, 2014, nonmonetary revenue of $4,275,000 and $8,100,000, respectively, was recognized. This resulted in an increase to intangible assets and prepaid expenses of $2,025,000 and $6,075,000, respectively.

	Total revenues for the three and nine months ended September 30, 2014 and 2013 consisted of the following:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
	Revenues	$	561,286	$	344,414	$	777,955	$	748,693
	Revenue from related party	1,125		37,125		5,375		57,375
	Revenues from nonmonetary transactions	4,275,000		—		8,100,000		—
	Total revenues	$	4,837,411	$	381,539	$	8,883,330	$	806,068

	The nonmonetary transactions for the three and nine months ended September 30, 2014 and 2013 supported by vendor-specific objective evidence of fair value are listed in the table below:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
	Revenues from license exchanges	$	1,350,000	$	—	$	2,025,000	$	—
	Revenues from service exchanges	2,925,000		—		6,075,000		—
	Revenues from nonmonetary transactions	$	4,275,000	$	—	$	8,100,000	$	—

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
RELATED PARTY TRANSACTIONS	Sep. 30, 2014
RELATED PARTY TRANSACTIONS	'
RELATED PARTY TRANSACTIONS	'
	NOTE 2: RELATED PARTY TRANSACTIONS

	As of September 30, 2014 and December 31, 2013, related party loans totaled $0 and $35,000, respectively. The Company repaid $35,000 of related party loans during the nine months ended September 30, 2014.

	As of September 30, 2014 and December 31, 2013, there were related party payables of $0 and $243,424, respectively, for services performed by related parties. During the nine months ended September 30, 2014, the Company repaid $243,424 to related parties for services, payroll and reimburseable expenses.

	As of September 30, 2014 and December 31, 2013, there were outstanding receivables of $27,500 and $82,250, respectively, for services performed for related parties.

	For the three and nine months ended September 30, 2014 and 2013, there were revenues earned of $1,125 and $37,125 and $5,375 and $57,375, respectively, for services performed for related parties.

NOTES_PAYABLE

NOTES PAYABLE	9 Months Ended
	Sep. 30, 2014
NOTES PAYABLE	'
NOTES PAYABLE	'
	NOTE 3: NOTES PAYABLE

	As of September 30, 2014 and December 31, 2013, the Company had the short term and long term notes payable as shown in the table below.

	Notes and loans payable	September 30,		December 31,
		2014		2013

	Short Term
	Maryland TEDCO Note	$	24,000	$	24,000
	Note Payable (net of $0 and $1,155 discount, respectively)	—		148,845
	Total	$	24,000	$	172,845
	Long Term
	Maryland TEDCO Note	$	57,800	$	79,800
	Total	$	57,800	$	79,800

	The Company previously had an outstanding loan from a third party in the amount of $74,900, which was originally issued during 2006 as part of an investment agreement. The loan was unsecured and bore interest at 25% per year for four years. The Company had accrued interest of $74,900, which was included in accounts payable and accrued expenses on the balance sheet. The note was in default until October 24, 2011, at which time the Company entered into a Termination and Release Agreement (“Release”) with the noteholder. The terms of the Release, among other things, terminated the Investment Agreement between the parties, and required the Company to issue a Promissory Note to the noteholder in the combined amount of principal and accrued interest owed to date, for a total principal amount of $149,800 (the “Maryland TEDCO Note”). The Maryland TEDCO Note is interest free, and is payable in monthly installments of $2,000 beginning November 1, 2011. During the nine months ending September 30, 2014, the Company made cash payments of $22,000 on this note. As of September 30, 2014 and December 31, 2013, the principal amount owed was $81,800 and $103,800, respectively, of which $24,000 and $24,000, respectively, has been recorded as the current portion of the note, and $57,800 and $79,800, respectively, as the long-term portion of the note.

	On August 3, 2013, the Company borrowed $150,000 from a third party with a coupon rate of 10%, due on September 10, 2013 with a warrant to purchase 20,000 common shares that vested immediately with a strike price of $0.50. The warrant was valued at $6,930 on August 3, 2013 using a closing price that day of $0.47, a strike price of $0.50, term of 5 years, volatility of 100%, dividends of 0%, and a discount rate of 1.36%. The value of the warrant of $6,930 was reflected as a discount to the note for a net amount of $143,070. For the year ended December 31, 2013, interest was accrued in the amount of $2,384 and $5,755 was recognzied as amortization expense. During the nine months ending September 30, 2014, the note principal of $150,000 and interest of $3,658 was paid in full and $1,155 was recognized as amortization expenses.

STOCKHOLDERS_EQUITY

STOCKHOLDERS' EQUITY	9 Months Ended
STOCKHOLDERS' EQUITY	Sep. 30, 2014
STOCKHOLDERS' EQUITY	'
STOCKHOLDERS' EQUITY	'
	NOTE 4: STOCKHOLDERS’ EQUITY

	As of September 30, 2014 and December 31, 2013, the Company had 70,552,753 and 53,239,369 shares of common stock issued and outstanding, respectively.

	On January 30, 2014, the Company sold an aggregate of 666,667 units to two accredited investors for gross proceeds of $200,000 in the second closing of a private placement (the “Second Private Placement”). Placement fees of $18,463 were paid and the Company received net proceeds of $181,537. The units in the Second Private Placement consisted of 666,667 shares of the Company’s common stock and warrants to purchase an additional 666,667 shares of the Company’s common stock. The warrants in the Second Private Placement have a term of five years and an exercise price of $0.40 per share.

	On February 3, 2014, the Company issued 44,307 shares of common stock valued at $13,292 and a five-year warrant to purchase 44,307 shares of common stock with a strike price of $0.40 for services. The Company used the Black-Scholes option pricing model to estimate the fair value of the warrants with a volatility of 100% and a risk free rate of 1.44% resulting in a fair value of $8,186, which was completely expensed in the current period. The warrant was issued to compensate for consulting services provided by a third-party. The shares were valued at the market price of the respective date of issuance.

	On March 27, 2014, the Company filed a Certificate of Amendment to the Certificate of Incorporation increasing the authorized number of shares of Company common stock to 250,000,000 from 100,000,000.

	On March 28, 2014, the Company issued 49,496 shares of common stock pursuant to the cashless exercise of 100,000 options.

	From January 1, 2014 through March 31, 2014, the Company also issued 100,000 shares of common stock for services valued at $28,500 with no future period amortization and 1,300,000 shares of common stock pursuant to exercise of warrants for total proceeds of $13,000. The shares were valued at the market price of the respective date of issuance.

	On June 30, 2014, the Company sold an aggregate of 2,766,667 units to three accredited investors for gross proceeds of $830,000 in the third closing of a private placement (the “Third Private Placement”). Placement fees of $55,848 were paid and the Company received net proceeds of $774,152. The units in the Third Private Placement consisted of 2,766,667 shares of the Company’s common stock and warrants to purchase an additional 2,766,667 shares of the Company’s common stock. The warrants have a term of five years and an exercise price of $0.40 per share.

	From April 1, 2014 through June 30, 2014, the Company also issued 1,071,916 shares of common stock for services for an expense of $354,835 with no future period amortization. Additionally, the Company issued 17,870 shares of common stock pursuant to the cashless exercise of 50,000 warrants.

	In July 2014, the Company offered holders of a series of its warrants, including the warrants issued in the Second Private Placement and the Third Private Placement, the opportunity to exercise their warrants for a 10% discount to the stated exercise price in exchange for their agreement to exercise their warrants in full and for cash on or before July 31, 2014. Under the warrant exercise offer, in July 2014 the Company issued 10,027,002 shares of common stock pursuant to exercise of warrants for gross proceeds of $3,632,801 and net proceeds of $3,501,521 after investment banking fees of $131,280.

	On July 17, 2014, the Company issued 34,459 shares of common stock pursuant to the cashless exercise of 75,000 common stock warrants.

	From July 1, 2014 through September 30, 2014, the Company also issued 515,000 shares of common stock for services valued at $382,300 with no future period amortization.

	In September 2014, the Company issued 20,000 shares of common stock pursuant to the exercise of 20,000 warrants at a strike price of $0.50 for proceeds of $10,000.

	On September 30, 2014, the Company sold an aggregate of 700,000 units to two accredited investors for gross proceeds of $350,000 in the closing of a private placement (the “Summer Private Placement”). The units in the Summer Private Placement consisted of 700,000 shares of the Company’s common stock and warrants to purchase ¼ of a share for every common share purchased or an additional 175,000 shares of the Company’s common stock. The warrants have a term of five years and an exercise price of $0.60 per share.

OPTIONS

9 Months Ended

Sep. 30, 2014

OPTIONS.

OPTIONS

NOTE 5: OPTIONS

As of September 30, 2014 and December 31, 2013, the Company has 11,306,850 and 4,485,250 options to purchase shares of common stock issued and outstanding, respectively, as follows:

Number of

Wtd Avg.

Intrinsic

Options

Exercise Price

Remaining

Value

Term

Outstanding at December 31, 2013

4,485,250

0.38

3.96

105,410

Granted

7,096,600

0.51

Less Forfeited

100,000

0.79

Less Exercised

175,000

0.31

Outstanding at September 30, 2014

11,306,850

0.46

4.00

709,393

The options were valued using the Black-Scholes pricing model. Significant assumptions used in the valuation during the nine months ended September 30, 2014 include expected terms of 2.50 to 3.33 years, expected volatility of 100%, risk free interest rate of 0.83% to 1.76%, and expected dividend yield of 0%.

On January 27, 2014, the Company awarded 1,500,000 options, one third of which vested immediately, one third vest upon the Company reporting a minimum of $10 million in annualized revenues by the second anniversary of the grant date and one third vest upon the Company reporting a minimum of $20 million in annualized reveunes by the third anniversary of the grant date, with an exercise price of $0.40 per share and an expiration date of January 27, 2019. The fair value on the grant date of the options was $303,562 and it is being recognized over the vesting period of the options.

On February 17, 2014, the Company awarded 55,000 options, which vest over three years, with an exercise price of $0.305 per share and an expiration date of February 17, 2019. The fair value on the grant date of the options was $10,556 and it is being recognized over the vesting period of the options.

On March 3, 2014, the Company awarded 250,000 options, of which 20% vested immediately and 20% vest every 90 days thereafter, with an exercise price of $0.40 per share and an expiration date of March 3, 2019. The fair value on the grant date of the options was $36,935 and it is being recognized over the vesting period of the options.

On March 24, 2014, the Company awarded 2,522,100 options, which vest over three years,with the exception of 200,000 options issued to one individual that vested immediately upon grant. The options have an exercise price of $0.45 per share and an expiration date of March 24, 2019. The fair value on the grant date of the options was $724,948 and it is being recognized over the vesting period of the options.

On June 2, 2014 and June 9, 2014, the Company awarded 175,000 options, which vest over three years. The options have an exercise price of $0.33 per share and an expiration date of June 2, 2019 and June 9, 2019. The fair value on the grant date of the options was $35,834 and it is being recognized over the vesting period of the options.

On June 11, 2014 and June 30, 2014, the Company awarded 400,000 options, which vest over three years. The options have an exercise price of $0.33 and $0.34 per share and an expiration date of June 11, 2019 and June 30, 2019. The fair value on the grant date of the options was $68,830 and it is being recognized over the vesting period of the options.

On July 1, 2014, the Company awarded 262,500 options, which vest over three years. The options have an exercise price of $0.35 per share and an expiration date of July 1, 2019. The fair value on the grant date of the options was $54,788 and it is being recognized over the vesting period of the options.

On July 21, 2014, the Company awarded 22,000 options, which vest over three years. The options have an exercise price of $0.91 per share and an expiration date of July 21, 2019. The fair value on the grant date of the options was $12,882 and it is being recognized over the vesting period of the options.

On July 22, 2014, the Company awarded 250,000 options, of which 20% vested immediately and 20% vest every 90 days thereafter, with an exercise price of $0.65 per share and an expiration date of July 22, 2019. The fair value on the grant date of the options was $97,876 and it is being recognized over the vesting period of the options.

On July 23, 2014, the Company awarded 125,000 options, which vest over three years. The options have an exercise price of $1.07 per share and an expiration date of July 23, 2019. The fair value on the grant date of the options was $80,905 and it is being recognized over the vesting period of the options.

On July 28, 2014, the Company awarded 75,000 options, which vest over three years. The options have an exercise price of $0.92 per share and an expiration date of July 28, 2019. The fair value on the grant date of the options was $42,981 and it is being recognized over the vesting period of the options.

On August 18, 2014, the Company awarded 60,000 options, which vest over three years. The options have an exercise price of $0.65 per share and an expiration date of August 18, 2019. The fair value on the grant date of the options was $25,067 and it is being recognized over the vesting period of the options.

On September 2, 2014, the Company awarded 130,000 options, which vest over three years. The options have an exercise price of $0.70 per share and an expiration date of September 2, 2019. The fair value on the grant date of the options was $58,548 and it is being recognized over the vesting period of the options.

On September 5, 2014, the Company awarded 1,220,000 options, which vest over three years. The options have an exercise price of between and $0.65 and $0.70 per share and an expiration date of September 5, 2019. The fair value on the grant date of the options was $593,826 and it is being recognized over the vesting period of the options.

On September 8, 2014, the Company awarded 25,000 options, which vest over three years. The options have an exercise price of $0.775 per share and an expiration date of September 5, 2019. The fair value on the grant date of the options was $11,750 and it is being recognized over the vesting period of the options.

On September 12, 2014, the Company awarded 25,000 options, which vest over three years. The options have an exercise price of $0.78 per share and an expiration date of September 12, 2019. The fair value on the grant date of the options was $11,945 and it is being recognized over the vesting period of the options.

For the nine months ended September 30, 2014 and 2013, stock compensation expense related to options totaled totaled $1,000,526 and $458,765, respectively.

WARRANTS

9 Months Ended

Sep. 30, 2014

WARRANT

WARRANTS

NOTE 6: WARRANTS

Below is a table summarizing the Company’s outstanding warrants as of September 30, 2014 and December 31, 2013:

Number of

Wtd Avg.

Intrinsic

Warrants

Exercise Price

Remaining

Value

Term

Outstanding at December 31, 2013

18,770,591

0.35

4.64

—

Granted

6,317,011

0.46

Less Exercised

11,397,002

0.36

Outstanding at September 30, 2014

13,690,600

0.40

3.68

984,178

The warrants were valued using the Black-Scholes pricing model. Significant assumptions used in the valuation during the nine months ended September 30, 2014 include expected terms of 1.50 to 2.50 years, expected volatility of 100%, risk free interest rate of 0.29% to 1.76%, and expected dividend yield of 0%.

On January 27, 2014, the Company issued five-year fully-vested warrants to purchase 250,000 shares of common stock with an exercise price of $0.40 per share. The fair value on the grant date of the warrants was $44,370 and was expensed during the nine months ended September 30, 2014.

On January 30, 2014, the Company sold an aggregate of 666,667 units to two accredited investors for gross proceeds of $200,000 in the Second Private Placement. The units in the Second Private Placement consisted of 666,667 shares of common stock and warrants to purchase an additional 666,667 shares of common stock, as well as 53,334 placement agent warrants. The warrants in the Second Private Placement have a term of five years, an exercise price of $0.40 per share and a fair value determined to be $122,287.

On February 3, 2014, the Company issued 44,307 shares of common stock and five-year fully-vested warrants to purchase 44,307 shares of common stock with an exercise price of $0.40 per share for payment for services. The fair value on the grant date of the warrants was $8,186 and was expensed during the nine months ended September 30, 2014.

On March 24, 2014, the Company issued warrants to purchase 1,000,000 shares of common stock. The warrants vest as follows: one warrant share for every $10 of gross sales by the Company during the 12-month period immediately following the date of grant to customers introduced by an affiliate of the warrant holder. The warrants have an exercise price of $0.40 per share and an expiration date of March 24, 2019. The fair value on the grant date of the warrants was $321,746 and it is being expensed over the expected vesting period of the warrants.

On June 30, 2014, the Company sold an aggregate of 2,766,667 units to three accredited investors for gross proceeds of $830,000 in the Third Private Placement. The units in the Third Private Placement consisted of 2,766,667 shares of common stock and warrants to purchase an additional 2,766,667 shares of common stock, as well as 168,000 placement agent warrants. The warrants in the Third Private Placement have a term of five years, an exercise price of $0.40 per share and a fair value determined to be $503,884.

On June 30, 2014, the Company issued three-year fully-vested warrants to purchase 100,000 shares of common stock with an exercise price of $0.35 per share for payment for services. The fair value on the grant date of the warrants was $13,202 and was expensed during the nine months ended September 30, 2014.

In July 2014, the Company offered holders of a series of its warrants, including the warrants issued in the Second Private Placement and the Third Private Placement, the opportunity to exercise their warrants for a 10% discount to the stated exercise price in exchange for their agreement to exercise their warrants in full and for cash on or before July 31, 2014. Under the warrant exercise offer, in July 2014 the Company warrants for 10,027,002 shares of common stock were exercised pursuant to this offer.

On July 17, 2014, the Company issued five-year warrants to purchase 25,000 shares of common stock that vest over twelve months and have an exercise price of $0.85 per share for payment for services. The fair value on the grant date of the warrants was $12,426 and it is being expensed over the vesting period of the warrants.

On August 25, 2014, the Company issued warrants to purchase 500,000 shares of common stock. The warrants vest as follows: one warrant share for every $10 of gross sales by the Company during the 12-month period immediately following the date of grant to customers introduced by the warrant holder. The warrants have an exercise price of $0.60 per share and an expiration date of August 25, 2017. The fair value on the grant date of the warrants was $198,374 and and it is being expensed over the expected vesting period of the warrants.

On August 27, 2014, the Company issued three-year fully-vested warrants to purchase 15,000 shares of common stock with an exercise price of $0.65 per share for payment for services. The fair value on the grant date of the warrants was $5,531 and it is being expensed over the vesting period of the warrants.

On August 29, 2014, the Company issued three-year fully-vested warrants to purchase 53,036 shares of common stock with an exercise price of $0.70 per share for the settlement of accrued payroll of $21,514. The fair value on the grant date of the warrants was $21,514.

On September 5, 2014, the Company issued five-year warrants to purchase 500,000 shares of common stock that vest over three years and have an exercise price of $0.79 per share for payment for services. The fair value on the grant date of the warrants was $253,999 and it is being expensed over the vesting period of the warrants.

On September 30, 2014, the Company sold an aggregate of 700,000 units to two accredited investors for gross proceeds of $350,000 in the Summer Private Placement. The units in the Summer Private Placement consisted of 700,000 shares of common stock and warrants to purchase ¼ of a share for every share purchased or an additional 175,000 shares of common stock. The warrants in the Summer Private Placement have a term of five years, an exercise price of $0.60 per share and a fair value determined to be $47,260.

For the nine months ended September 30, 2014 and 2013, the Company has incurred warrant-based expense of $189,172 and $59,254, respectively.

PERFORMANCE_SHARE_UNITS

PERFORMANCE SHARE UNITS	9 Months Ended
	Sep. 30, 2014
PERFORMANCE SHARE UNITS	'
PERFORMANCE SHARE UNITS	'
	NOTE 7: PERFORMANCE SHARE UNITS

	On January 27, 2014, the Company entered into a Performance Share Unit Agreement under the AudioEye, Inc. 2013 Incentive Compensation Plan with Paul Arena, the Company’s Executive Chairman. Mr. Arena was granted an award of up to an aggregate of 3,000,000 Performance Share Units (“PSUs”). Each PSU represents the right to receive one share of the Company’s common stock. The number of PSUs for a performance period will be determined by the level of achievement of performance goals in accordance with the terms and provisions of the Performance Share Unit Agreement.

	On September 5, 2014, the Company entered into Performance Share Unit Agreements under the AudioEye, Inc. 2015 Incentive Compensation Plan with two employees. Each was granted an award of up to an aggregate of 200,000 PSUs. Each PSU represents the right to receive one share of the Company’s common stock. The number of PSUs for a performance period will be determined by the level of achievement of performance goals in accordance with the terms and provisions of the Performance Share Unit Agreement.

	On September 30, 2014, the Company entered into a Performance Share Unit Agreement under the AudioEye, Inc. 2015 Incentive Compensation Plan with one employee. The employee was granted an award of up to an aggregate of 100,000 PSUs. Each PSU represents the right to receive one share of the Company’s common stock. The number of PSUs for a performance period will be determined by the level of achievement of performance goals in accordance with the terms and provisions of the Performance Share Unit Agreement.

	Below is a table summarizing the Company’s outstanding performance share units as of September 30, 2014 and December 31, 2013:

		Number of	Wtd Avg.		Wtd Avg.
		PSUs	Grant Fair Value		Remaining
					Term
	Outstanding at December 31, 2013	1,000,000	$	0.45	1.75

	Granted	3,500,000	0.39

	Outstanding at September 30, 2014	4,500,000	$	0.40	2.14

	For the nine months ended September 30, 2014 and 2013, the Company has incurred performance share unit-based expense of $348,859 and $75,000, respectively.

	For the nine months ended September 30, 2014 and 2013, aggregate stock compensation expense related to the options, warrants and performance stock units totaled $1,538,557 and $593,019, respectively. As of September 30, 2014, the aggregate stock compensation expense related to the options, warrants and performance stock units to be amortized through March 2017 is $2,310,338.

INTANGIBLE_ASSETS

INTANGIBLE ASSETS	9 Months Ended
	Sep. 30, 2014
INTANGIBLE ASSETS	'
INTANGIBLE ASSETS	'
	NOTE 8: INTANGIBLE ASSETS

	As of September 30, 2014, patents, technology and other intangibles with contractual terms were generally amortized over their estimated useful lives of five or ten years. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

	Prior to any impairment adjustment, intangible assets consisted of the following:

		September 30,			December 31,
		2014			2013

	Patents	$	3,602,454		$	3,563,343
	Software Development Costs	517,500			—
	Licensing	2,025,000			—
	Accumulated Amortization	(949,327		)	(489,398		)
	Intangible Assets, Net	$	5,195,627		$	3,073,945

	Software development costs and licensing intangible assets both have an estimated useful life of 3 years. Software development costs are incurred during the building of the Company’s Internet platform. Licensing costs are those costs incurred to use processes and technologies not developed by the Company. Both software development and licensing costs are subject to annual impairment testing. During the nine months ended September 30, 2014, $556,611 was capitalized as software development cost and patent acquisition costs. During the nine months ended September 30, 2014, a total of $2,025,000 of licenses were purchased by exchanging the Company’s own licenses and were accounted for as a non-cash transaction in accordance with ASC 985-845. See Note 1 for more details.

	Amortization expense totaled $459,929 and $266,738 for the nine months ended September 30, 2014 and 2013, respectively.

INVESTMENTS

INVESTMENTS	9 Months Ended
INVESTMENTS	Sep. 30, 2014
INVESTMENTS	'
INVESTMENTS	'
	NOTE 9: INVESTMENTS

	In March 2013, the Company was granted an aggregate of 300,000 common shares in Beta Music Group, Inc. (OTCBB: BEMG) for consulting services. Beta Music Group, Inc. has not yet established an active trading market for shares of common stock as of September 30, 2014. The Company has received the 300,000 common shares and assigned a value of $0 to those shares until a liquid trading market is established.

	On June 27, 2014, the Company and Ecologic Transportation, Inc. agreed to convert $60,000 of accounts receivable owed to the Company into 600,000 shares of Ecologic Transportation, Inc. common stock at a rate of $0.10 per share. The Ecologic Transportation, Inc. common stock has a value of $0.08 per share as of September 30, 2014, with an aggregate value of $48,000 as of such date resulting in an unrealized loss on marketable securities of $12,000 for the nine months ended September 30, 2014. The shares of Ecologic Transportation, Inc. common stock are expected to be issued to the Company in the fourth quarter of 2014.

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2014
SUBSEQUENT EVENTS	'
SUBSEQUENT EVENTS	'
	NOTE 10: SUBSEQUENT EVENTS

	On October 3, 2014, the Company awarded 300,000 options, which vest twenty percent upon grant and twenty percent every ninety days thereafter. The options have an exercise price of $0.60 per share and an expiration date of October 3, 2017.

	On October 10, 2014 the Company issued 50,000 shares of common stock for services.

	On October 16, 2014, the Company awarded 37,500 options, which vest over three years. The options have an exercise price of $0.65 per share and an expiration date of October 16, 2019.

	On October 20, 2014, the Company awarded 115,000 options, which vest over three years. The options have an exercise price of $0.61 per share and an expiration date of October 20, 2019.

ORGANIZATION_AND_BASIS_OF_PRES1

ORGANIZATION AND BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2014
ORGANIZATION AND BASIS OF PRESENTATION	'
Reclassification	'
	Reclassification

	Certain prior year amounts have been reclassified to conform to the current year presentation.


Revenue Recognition	'
	Revenue Recognition

	Revenue is recognized when all applicable recognition criteria have been met, which generally include: (a) persuasive evidence of an existing arrangement; (b) a fixed or determinable price; (c) delivery has occurred or service has been rendered; and (d) the collectability of the sales price is reasonably assured. For software and technology development contracts, where applicable, the Company recognizes revenues on a percentage of completion method based upon several factors including but not limited to: (a) an estimate of total hours and milestones to complete; (b) the total hours completed; (c) the delivery of services rendered; (d) the change in estimates; and (e) the collectability of the contract.

	Licensing revenues for intangible assets, including intellectual property such as patents and trademarks, are recognized when all of the following criteria have been met: (a) persuasive evidence of an existing arrangement; (b) a fixed or determinable price; (c) the delivery has occurred or service has been rendered; and (d) the collectability of the sales price is reasonably assured. Licensing revenues are recognized over the term of the contract or, in the case of a perpetual license, revenues are recognized in the period the criteria have been met. In transactions where the Company engages in a non-cash exchange of a license of the Company for the license of the Company’s customer, the Company follows Accounting Standards Codification (“ASC”) 985-605 and ASC 985-845-10. The licenses received from the Company’s customers are sold, licensed or leased in a different line of business from the Company license delivered to the Company’s customers in the exchange. The fair value of the technology or products exchanged or received is determined within reasonable limits and used to determine vendor-specific objective evidence with the purpose to enhance product offerings for the sale or license to third parties. The Company uses fair value guidance of the vendor-specific objective evidence of fair value (“VSOE”) under ASC 985-605. The contracts are then evaluted for commercial substance, including that the licenses received by the Company in the exchange are expected, at the time of the exchange, to be deployed and used by the software vendor and the value ascribed to the transaction reasonably reflects such expected use.

	In transactions where the Company engages in a non-cash exchange of a license of the Company for the services of the Company’s customer, the Company follows ASC 985-605 and ASC 985-845-10. The fair value of the technology or services exchanged or received is determined within reasonable limits and used to determine vendor-specific objective evidence. The Company uses fair value guidance of the VSOE under ASC 985-605. The revenue under these transactions is recognized upon delivery of the license and the services received in exchange are recognized as a prepaid asset that is amortized to expense as the services are received. The Company evaluates whether the period over which the services are received requires treatment as extended payment terms under ASC 985-605-25-33 and the Company evaluates the collectibility of the services to be received under ASC 985-605.

	For the three and nine months ended September 30, 2014, the Company sold an aggregate of nineteen and thirty-six licenses, respectively, with a fair value of $225,000 per license, in exchange for either a license to their intellectual property or prepaid services. The licenses exchanged were determined to meet the aforementioned criteria. During the three and nine months ended September 30, 2014, nonmonetary revenue of $4,275,000 and $8,100,000, respectively, was recognized. This resulted in an increase to intangible assets and prepaid expenses of $2,025,000 and $6,075,000, respectively.

	Total revenues for the three and nine months ended September 30, 2014 and 2013 consisted of the following:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
	Revenues	$	561,286	$	344,414	$	777,955	$	748,693
	Revenue from related party	1,125		37,125		5,375		57,375
	Revenues from nonmonetary transactions	4,275,000		—		8,100,000		—
	Total revenues	$	4,837,411	$	381,539	$	8,883,330	$	806,068

	The nonmonetary transactions for the three and nine months ended September 30, 2014 and 2013 supported by vendor-specific objective evidence of fair value are listed in the table below:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
	Revenues from license exchanges	$	1,350,000	$	—	$	2,025,000	$	—
	Revenues from service exchanges	2,925,000		—		6,075,000		—
	Revenues from nonmonetary transactions	$	4,275,000	$	—	$	8,100,000	$	—

ORGANIZATION_AND_BASIS_OF_PRES2

ORGANIZATION AND BASIS OF PRESENTATION (Tables)	9 Months Ended
ORGANIZATION AND BASIS OF PRESENTATION (Tables)	Sep. 30, 2014
ORGANIZATION AND BASIS OF PRESENTATION	'
Schedule of total revenues	'

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
	Revenues	$	561,286	$	344,414	$	777,955	$	748,693
	Revenue from related party	1,125		37,125		5,375		57,375
	Revenues from nonmonetary transactions	4,275,000		—		8,100,000		—
	Total revenues	$	4,837,411	$	381,539	$	8,883,330	$	806,068


Schedule of nonmonetary transactions supported by vendor-specific objective evidence of fair value	'

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2014		2013		2014		2013
	Revenues from license exchanges	$	1,350,000	$	—	$	2,025,000	$	—
	Revenues from service exchanges	2,925,000		—		6,075,000		—
	Revenues from nonmonetary transactions	$	4,275,000	$	—	$	8,100,000	$	—

NOTES_PAYABLE_Tables

NOTES PAYABLE (Tables)	9 Months Ended
	Sep. 30, 2014
NOTES PAYABLE	'
Schedule of current and long term notes payable	'
	Notes and loans payable	September 30,		December 31,
		2014		2013

	Short Term
	Maryland TEDCO Note	$	24,000	$	24,000
	Note Payable (net of $0 and $1,155 discount, respectively)	—		148,845
	Total	$	24,000	$	172,845
	Long Term
	Maryland TEDCO Note	$	57,800	$	79,800
	Total	$	57,800	$	79,800

OPTIONS_Tables

OPTIONS (Tables)	9 Months Ended
OPTIONS (Tables)	Sep. 30, 2014
OPTIONS.	'
Summary of the Company's outstanding options	'
		Number of	Wtd Avg.		Wtd Avg.	Intrinsic
		Options	Exercise Price		Remaining	Value
					Term
	Outstanding at December 31, 2013	4,485,250	$	0.38	3.96	$	105,410

	Granted	7,096,600	0.51
	Less Forfeited	100,000	0.79
	Less Exercised	175,000	0.31

	Outstanding at September 30, 2014	11,306,850	$	0.46	4.00	$	709,393

WARRANTS_Tables

WARRANTS (Tables)	9 Months Ended
	Sep. 30, 2014
WARRANT	'
Summary of the Company's outstanding warrants	'
		Number of	Wtd Avg.		Wtd Avg.	Intrinsic
		Warrants	Exercise Price		Remaining	Value
					Term
	Outstanding at December 31, 2013	18,770,591	$	0.35	4.64	$	—

	Granted	6,317,011	0.46
	Less Exercised	11,397,002	0.36

	Outstanding at September 30, 2014	13,690,600	$	0.40	3.68	$	984,178

PERFORMANCE_SHARE_UNITS_Tables

PERFORMANCE SHARE UNITS (Tables)	9 Months Ended
	Sep. 30, 2014
PERFORMANCE SHARE UNITS	'
Summary of outstanding performance share units	'

		Number of	Wtd Avg.		Wtd Avg.
		PSUs	Grant Fair Value		Remaining
					Term
	Outstanding at December 31, 2013	1,000,000	$	0.45	1.75

	Granted	3,500,000	0.39

	Outstanding at September 30, 2014	4,500,000	$	0.40	2.14

INTANGIBLE_ASSETS_Tables

INTANGIBLE ASSETS (Tables)	9 Months Ended
	Sep. 30, 2014
INTANGIBLE ASSETS	'
Schedule of intangible assets	'
		September 30,			December 31,
		2014			2013

	Patents	$	3,602,454		$	3,563,343
	Software Development Costs	517,500			—
	Licensing	2,025,000			—
	Accumulated Amortization	(949,327		)	(489,398		)
	Intangible Assets, Net	$	5,195,627		$	3,073,945

ORGANIZATION_AND_BASIS_OF_PRES3

ORGANIZATION AND BASIS OF PRESENTATION (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
	item	Sep. 30, 2013	item	Sep. 30, 2013
ORGANIZATION AND BASIS OF PRESENTATION	'	'	'	'
Number of licenses sold for cash	19	'	36	'
Cash amount received from sale of per license	$225,000	'	$225,000	'
Revenue recognized for licenses exchanged meeting revenue recognition criteria	4,275,000	'	8,100,000	'
Increase in intangible assets	2,025,000	'	6,075,000	'
Total revenues	'	'	'	'
Revenue	561,286	344,414	777,955	748,693
Revenue from related party	1,125	37,125	5,375	57,375
Revenues from nonmonetary transaction	4,275,000	'	8,100,000	'
Total revenues	4,837,411	381,539	8,883,330	806,068
Nonmonetary transactions supported by vendor-specific objective evidence of fair value	'	'	'	'
Revenues from license exchanges	1,350,000	'	2,025,000	'
Revenues from service exchanges	2,925,000	'	6,075,000	'
Revenues from nonmonetary transactions	$4,275,000	'	$8,100,000	'

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details) (USD $)	3 Months Ended		9 Months Ended
RELATED PARTY TRANSACTIONS (Details) (USD $)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
RELATED PARTY TRANSACTIONS	'	'	'	'	'
Related party loans	$0	'	$0	'	$35,000
Repayment of related party loans	'	'	35,000	'	'
Related party payable	0	'	0	'	243,424
Payment to related party	'	'	243,424	'	'
Related party receivables	27,500	'	27,500	'	82,250
Revenue from related party	$1,125	$37,125	$5,375	$57,375	'

NOTES_PAYABLE_Details

NOTES PAYABLE (Details) (USD $)	9 Months Ended			0 Months Ended	9 Months Ended		0 Months Ended	9 Months Ended	12 Months Ended	0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Oct. 24, 2011	Sep. 30, 2014	Dec. 31, 2013	Aug. 03, 2013	Sep. 30, 2014	Dec. 31, 2013	Oct. 24, 2011	Oct. 24, 2011
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Maryland TEDCO Note	Maryland TEDCO Note	Maryland TEDCO Note	Note	Note	Note	Loans Payable	Loans Payable
Notes Payable	'	'	'	'	'	'	'	'	'	'	'
Short Term	$24,000	'	$172,845	'	$24,000	$24,000	'	'	$148,845	'	'
Long Term	57,800	'	79,800	'	57,800	79,800	'	'	'	'	'
Discount	0	'	1,155	'	'	'	6,930	0	1,155	'	'
Carrying amount of debt	'	'	'	'	81,800	103,800	143,070	'	'	'	74,900
Interest rate	'	'	'	'	'	'	10.00%	'	'	'	25.00%
Due date from the date of issuance	'	'	'	'	'	'	'	'	'	'4 years	'
Accrued interest	'	'	'	'	'	'	'	'	2,384	'	74,900
Face amount of debt	'	'	'	149,800	'	'	150,000	'	'	'	'
Monthly payments	'	'	'	2,000	'	'	'	'	'	'	'
Warrants to purchase shares	'	'	'	'	'	'	20,000	'	'	'	'
Strike price (in dollars per share)	$0.50	'	'	'	'	'	$0.50	'	'	'	'
Share price (in dollars per share)	'	'	'	'	'	'	$0.47	'	'	'	'
Term	'	'	'	'	'	'	'5 years	'	'	'	'
Volatility (as a percent)	'	'	'	'	'	'	100.00%	'	'	'	'
Dividends (as a percent)	'	'	'	'	'	'	0.00%	'	'	'	'
Discount rate (as a percent)	'	'	'	'	'	'	1.36%	'	'	'	'
Amortization expense	459,929	266,738	'	'	'	'	'	1,155	5,755	'	'
Payment of accrued interest	'	'	'	'	'	'	'	3,658	'	'	'
Repayment of Principal	'	'	'	'	$22,000	'	'	$150,000	'	'	'

STOCKHOLDERS_EQUITY_Details

STOCKHOLDERS' EQUITY (Details) (USD $)

0 Months Ended

1 Months Ended

3 Months Ended

9 Months Ended

0 Months Ended

1 Months Ended

9 Months Ended

0 Months Ended

Jul. 17, 2014

Mar. 28, 2014

Sep. 30, 2014

Jun. 30, 2014

Mar. 31, 2014

Sep. 30, 2014

Sep. 30, 2013

Jul. 17, 2014

Mar. 27, 2014

Dec. 31, 2013

Oct. 10, 2014

Jul. 31, 2014

Sep. 30, 2014

Feb. 03, 2014

Sep. 30, 2014

Jun. 30, 2014

Jan. 30, 2014

Sep. 30, 2014

Jun. 30, 2014

Subsequent Event

Warrants

Warrants granted on February 3, 2014

Accredited investors

Warrants

item

STOCKHOLDERS' EQUITY

Common Stock, shares issued

49,496

70,552,753

34,459

53,239,369

Common Stock, shares outstanding

70,552,753

53,239,369

Common stock issued for services (in shares)

100,000

50,000

44,307

Expenses related to common stock issued for service

$28,500

Stockholders' Equity

Units sold to accredited investors (in shares)

700,000

2,766,667

666,667

Number of accredited investors

Proceeds from sale of units to accredited investors

350,000

830,000

200,000

Units sold to accredited investors, number of common shares

700,000

2,766,667

666,667

Percent of common shares available to purchase with the purchase of a common share of stock

0.25%

Additional number of shares of common stock included with the units sold to agents

175,000

168,000

53,334

Units sold to accredited investors, number of warrants

700,000

2,766,667

666,667

Term of warrants issued to accredited investor

'5 years

Exercise price of units (in dollars per share)

$0.60

$0.40

Common stock value

13,292

Warrants to purchase shares

44,307

Term of warrant

'5 years

Strike price (in dollars per share)

$0.50

$0.40

Value of warrants

8,186

47,260

503,884

Common Stock, shares authorized

250,000,000

Common Stock, shares authorized before amendment

100,000,000

Common Stock, shares issued

49,496

70,552,753

34,459

53,239,369

Common shares for the exercise of options

75,000

100,000

20,000

Common stock issued for services (in shares)

100,000

50,000

44,307

Expenses related to common stock issued for service

28,500

Common stock issued for exercise of warrants (in shares)

50,000

1,300,000

Gross proceeds from exercise of warrants

3,632,801

Proceeds from exercise of warrants

10,000

13,000

3,524,521

37,188

3,501,521

Private placement cost

131,280

55,848

18,463

Net proceeds from sale of units to accredited investors

774,152

181,537

Volatility (as a percent)

100.00%

Risk-free interest rate (as a percent)

1.44%

Amortization period

'0 years

Discount percent

Shares exercised

10,027,002

11,397,002

Value of shares issued for services

$382,300

$354,835

Common Stock, shares issued

20,000

515,000

1,071,916

17,870

OPTIONS_Details

OPTIONS (Details) (USD $)

0 Months Ended

1 Months Ended

9 Months Ended

12 Months Ended

9 Months Ended

0 Months Ended

Jul. 17, 2014

Mar. 28, 2014

Sep. 30, 2014

Sep. 30, 2013

Jul. 17, 2014

Dec. 31, 2013

Sep. 30, 2014

Sep. 30, 2013

Dec. 31, 2013

Mar. 31, 2014

Sep. 30, 2014

Jan. 27, 2014

Feb. 17, 2014

Mar. 03, 2014

Mar. 24, 2014

Jun. 09, 2014

Jun. 02, 2014

Jun. 09, 2014

Jun. 02, 2014

Jun. 30, 2014

Jun. 11, 2014

Jun. 30, 2014

Jun. 11, 2014

Jul. 01, 2014

Jul. 21, 2014

Jul. 22, 2014

Jul. 23, 2014

Jul. 28, 2014

Aug. 18, 2014

Sep. 02, 2014

Sep. 05, 2014

Sep. 08, 2014

Sep. 12, 2014

Options

Minimum

Maximum

Options issued on January 27, 2014

Options issued on February 17, 2014

Options issued on March 3, 2014

Options issued on March 24, 2014

Options Granted on 2 June and 9 June 2014 [Member]

Options Granted on 11June and 30 June 2014 [Member]

Options Granted On 1 July 2014 Member

Options Granted On 21 July 2014 Member

Options Granted On 22 July 2014 Member

Options Granted On 23 July 2014 Member

Options Granted On 28 July 2014 Member

Options Granted On 18 August 2014 Member

Options Granted On 2 September 2014 Member

Options Granted On 5 September 2014 Member

Options Granted On 8 September 2014 Member

Options Granted On 12 September 2014 Member

Immediate vesting

Vesting upon company reporting minimum $10 million in annualized revenue by 2nd anniversary

Vesting upon company reporting minimum $20 million in annualized revenue by 3rd anniversary

Immediate vesting

Vesting every 90 days

One individual

Immediate vesting

Vesting every 90 days

Minimum

Maximum

Options

Options issued and outstanding

11,306,850

4,485,250

Number of options:

Outstanding at beginning of the period (in shares)

4,485,250

Granted (in shares)

7,096,600

1,500,000

55,000

250,000

2,522,100

200,000

175,000

400,000

262,500

22,000

250,000

125,000

75,000

60,000

130,000

1,220,000

25,000

Less Forfeited (in shares)

100,000

Less Exercised (in shares)

75,000

100,000

20,000

175,000

Outstanding at the end of the period (in shares)

11,306,850

4,485,250

Wtd Avg. Exercise Price

Outstanding at beginning of the period (in dollars per share)

$0.38

Granted (in dollars per share)

$0.51

Less Forfeited (in dollars per share)

$0.79

Less Exercised (in dollars per share)

$0.31

Outstanding at end of the period (in dollars per share)

$0.46

$0.38

Wtd Avg. Remaining Term

Outstanding at beginning of the period, wtd Avg. Remaining Term

'4 years

'3 years 11 months 16 days

Outstanding at end of the period, wtd Avg. Remaining Term

'4 years

'3 years 11 months 16 days

Intrinsic Value

Outstanding at beginning of the period, Intrinsic Value (in dollars)

$105,410

$709,393

Outstanding at end of the period, Intrinsic Value (in dollars)

105,410

709,393

Significant assumptions used in the valuation

Expected term

'2 years 6 months

'3 years 3 months 29 days

Expected volatility (as a percent)

100.00%

Risk-free interest rate (as a percent)

0.83%

1.76%

Expected dividend yield (as a percent)

0.00%

Grant date fair value of options

303,562

10,556

36,935

724,948

35,834

68,830

54,788

12,882

97,876

80,905

42,981

25,067

58,548

593,826

11,750

11,945

Share based compensation expense

1,538,557

593,019

1,000,526

458,765

Number of options awarded

7,096,600

1,500,000

55,000

250,000

2,522,100

200,000

175,000

400,000

262,500

22,000

250,000

125,000

75,000

60,000

130,000

1,220,000

25,000

Vesting percentage

33.33%

20.00%

Minimum annualized revenues reported by 2nd anniversary from the grant date

10,000,000

Minimum annualized revenues reported by 3nd anniversary from the grant date

$20,000,000

Exercise Price (in dollars per share)

$0.50

$0.40

$0.31

$0.40

$0.45

$0.33

$0.34

$0.33

$0.35

$0.91

$0.65

$1.07

$0.92

$0.65

$0.70

$0.65

$0.70

$0.78

Vesting period

'3 years

Common shares for the exercise of options

75,000

100,000

20,000

175,000

Common Stock, shares issued

49,496

70,552,753

34,459

53,239,369

WARRANTS_Details

WARRANTS (Details) (Warrants, USD $)	1 Months Ended	9 Months Ended	12 Months Ended
WARRANTS (Details) (Warrants, USD $)	Jul. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Warrants	'	'	'
Number of warrants	'	'	'
Number of shares, beginning	'	18,770,591	'
Number of shares, granted	'	6,317,011	'
Number of shares, less exercised	10,027,002	11,397,002	'
Number of shares, ending	'	13,690,600	18,770,591
Weighted average exercise price	'	'	'
Weighted average exercise price, beginning (in dollars per share)	'	$0.35	'
Weighted average exercise price, granted (in dollars per share)	'	$0.46	'
Weighted average exercise price, less exercised (in dollars per share)	'	$0.36	'
Weighted average exercise price, ending (in dollars per share)	'	$0.40	$0.35
"Wtd Avg. Remaining Term "	'	'	'
Outstanding at beginning of the period	'	'3 years 8 months 5 days	'4 years 7 months 21 days
Outstanding at end of the period	'	'3 years 8 months 5 days	'4 years 7 months 21 days
Intrinsic Value	'	'	'
Outstanding at end of the period	'	$984,178	'

WARRANTS_Details_2

WARRANTS (Details 2) (USD $)

3 Months Ended

9 Months Ended

0 Months Ended

1 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

Mar. 31, 2014

Sep. 30, 2014

Sep. 30, 2013

Jun. 30, 2014

Sep. 30, 2014

Jun. 30, 2014

Jan. 30, 2014

Sep. 30, 2014

Jun. 30, 2014

Jul. 31, 2014

Sep. 30, 2014

Sep. 30, 2013

Mar. 24, 2014

Jan. 27, 2014

Sep. 30, 2014

Feb. 03, 2014

Sep. 30, 2014

Jul. 17, 2014

Aug. 25, 2014

Aug. 27, 2014

Aug. 29, 2014

Sep. 30, 2014

Aug. 29, 2014

Sep. 05, 2014

Sep. 30, 2014

Warrants granted on June 30, 2014

Accredited investors

Warrants

item

Warrants granted on March 24, 2014

Warrants granted on January 27, 2014

Warrants granted on February 3, 2014

Warrants granted on June 30, 2014

Warrants granted on July 17, 2014

Warrants granted on August 25, 2014

Warrants granted on August 27, 2014

Warrants granted on August 29, 2014

Warrants granted on September 5, 2014

Minimum

Maximum

Significant assumptions used in the valuation

Expected term

'1 year 6 months

'2 years 6 months

Expected volatility (as a percent)

100.00%

Risk-free interest rate (as a percent)

0.29%

1.76%

Expected dividend yield (as a percent)

0.00%

Strike price (in dollars per share)

$0.50

$0.35

$0.40

$0.85

$0.60

$0.65

$0.70

$0.79

Grant date fair value of options

$122,287

Stock compensation expense related to the options and warrants

1,538,557

593,019

189,172

59,254

44,370

8,186

13,202

21,514

Grant date fair value of warrants

13,202

47,260

503,884

321,746

44,370

8,186

12,426

198,374

5,531

21,514

253,999

Common stock issued for services (in shares)

100,000

44,307

Warrants to purchase shares

100,000

1,000,000

250,000

44,307

25,000

500,000

15,000

53,036

500,000

Vesting period

'12 months

'3 years

Number of warrants, which will vest for every specified dollars of gross sales

Amount of gross sales for which one warrant share will vest

Period immediately following the issue date during which warrants will vest for every specified dollars of gross sales

'12 months

Term of warrant

'3 years

'5 years

'3 years

'5 years

Units sold to accredited investors (in shares)

700,000

2,766,667

666,667

Number of accredited investors to whom the entity sold units

Proceeds from sale of units to accredited investors

350,000

830,000

200,000

Number of shares of common stock included with the units sold

700,000

2,766,667

666,667

Percent Of Common Shares Available To Purchase With The Purchase Of A Common Share Of Stock

0.25%

Additional number of shares of common stock included with the units sold

2,766,667

666,667

Number of shares of warrants included with the units sold

700,000

2,766,667

666,667

Additional number of shares of common stock included with the units sold to agents

175,000

168,000

53,334

Term of warrants issued to accredited investor

'5 years

Exercise price of units (in dollars per share)

$0.60

$0.40

Debt discount for warrants issued with debt

6,930

Discount percent

Shares exercised

10,027,002

11,397,002

Accrued salary converted amount

$21,514

PERFORMANCE_SHARE_UNITS_Detail

PERFORMANCE SHARE UNITS (Details) (USD $)	9 Months Ended		0 Months Ended		9 Months Ended		12 Months Ended		0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 05, 2014	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 05, 2014	Jan. 27, 2014
			PSUs	PSUs	PSUs	PSUs	PSUs	PSUs	Mr. Arena
					item			item	PSUs
PERFORMANCE SHARE UNITS	'	'	'	'	'	'	'	'	'
Number of employees granted	'	'	'	'	1	'	'	2	'
Performance share unit agreement granted (in shares)	'	'	100,000	200,000	3,500,000	'	'	'	3,000,000
Number of shares issued for each performance share unit	'	'	1	1	'	'	'	'	1
Number of PSUs	'	'	'	'	'	'	'	'	'
Number of shares, beginning	'	'	4,500,000	'	1,000,000	'	'	'	'
Granted (in shares)	'	'	100,000	200,000	3,500,000	'	'	'	3,000,000
Number of shares, ending	'	'	'	'	4,500,000	'	1,000,000	'	'
Wtd Avg. Grant Price	'	'	'	'	'	'	'	'	'
Weighted average exercise price, beginning (in dollars per share)	'	'	$0.40	'	$0.45	'	'	'	'
Granted (in dollars per share)	'	'	'	'	$0.39	'	'	'	'
Weighted average exercise price, ending (in dollars per share)	'	'	'	'	$0.40	'	$0.45	'	'
Wtd Avg. Remaining Term	'	'	'	'	'	'	'	'	'
Outstanding at the beginning of the period	'	'	'	'	'2 years 1 month 21 days	'	'1 year 9 months	'	'
Outstanding at the end of the period	'	'	'	'	'2 years 1 month 21 days	'	'1 year 9 months	'	'
Stock compensation expense related to the options and warrants	$1,538,557	$593,019	'	'	$348,859	$75,000	'	'	'
Total stock compensation expense to be amortized through March 2017	$2,310,338	'	'	'	'	'	'	'	'

INTANGIBLE_ASSETS_Details

INTANGIBLE ASSETS (Details) (USD $)	3 Months Ended	9 Months Ended
INTANGIBLE ASSETS (Details) (USD $)	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Intangible Assets	'	'	'	'
Accumulated Amortization	($949,327)	($949,327)	'	($489,398)
Intangible Assets, Net	5,195,627	5,195,627	'	3,073,945
Total licenses purchased as a non-cash transaction	2,025,000	6,075,000	'	'
Amortization expense	'	459,929	266,738	'
Minimum	'	'	'	'
Intangible Assets	'	'	'	'
Estimated useful lives of intangibles assets	'	'5 years	'	'
Maximum	'	'	'	'
Intangible Assets	'	'	'	'
Estimated useful lives of intangibles assets	'	'10 years	'	'
Patents	'	'	'	'
Intangible Assets	'	'	'	'
Intangible Assets, Gross	3,602,454	3,602,454	'	3,563,343
Software Development Costs	'	'	'	'
Intangible Assets	'	'	'	'
Estimated useful lives of intangibles assets	'	'3 years	'	'
Intangible Assets, Gross	517,500	517,500	'	'
Patents and software Development Costs	'	'	'	'
Intangible Assets	'	'	'	'
Capitalized cost	'	556,611	'	'
Licensing	'	'	'	'
Intangible Assets	'	'	'	'
Estimated useful lives of intangibles assets	'	'3 years	'	'
Intangible Assets, Gross	2,025,000	2,025,000	'	'
Total licenses purchased as a non-cash transaction	'	$2,025,000	'	'

INVESTMENTS_Details

INVESTMENTS (Details) (USD $)	3 Months Ended			9 Months Ended		1 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended
	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2014	Jun. 27, 2014	Sep. 30, 2014	Jun. 27, 2014
	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Beta Music Group Inc Member	Beta Music Group Inc Member	Ecologic Transportation Inc Member	Ecologic Transportation Inc Member	Ecologic Transportation Inc Member
Common stock issued for services (in shares)	'	100,000	'	'	'	300,000	'	'	'	'
Share price (in dollars per share)	'	'	'	'	'	'	'	'	$0.08	$0.10
Cash paid by the Company	'	'	'	'	'	'	$0	'	'	'
Amount of accounts receivable to be converted into shares of common stock	'	'	'	'	'	'	'	60,000	'	'
Accounts receivable converted into shares of common stock	'	'	'	'	'	'	'	600,000	'	'
Common Stock, Value, Outstanding	'	'	'	'	'	'	'	'	48,000	'
Marketable Securities, Unrealized Gain (Loss)	($12,000)	'	($9,000)	($12,000)	($18,000)	'	'	'	$12,000	'

SUBSEQUENT_EVENTS_Details

SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended	9 Months Ended	0 Months Ended
	Mar. 31, 2014	Sep. 30, 2014	Oct. 10, 2014	Oct. 20, 2014	Oct. 16, 2014	Oct. 03, 2014	Oct. 03, 2014	Oct. 03, 2014
		Options	Subsequent Event	Subsequent Event	Subsequent Event	Subsequent Event	Subsequent Event	Subsequent Event
				Options	Options	Options	Options	Options
							Options Vested on Grant Date	Vesting every 90 days
Subsequent event	'	'	'	'	'	'	'	'
Common stock issued for services (in shares)	100,000	'	50,000	'	'	'	'	'
Number of options awarded	'	7,096,600	'	115,000	37,500	300,000	'	'
Vesting percentage	'	'	'	'	'	'	20.00%	20.00%
Vesting period	'	'	'	'3 years	'3 years	'	'	'
Exercise price of units (in dollars per share)	'	'	'	$0.61	$0.65	$0.60	'	'