Frequently Asked Questions

 

1. Who is David J. Kovacs, and why was he recruited by AudioEye?

 

David J. Kovacs is a New York–based entrepreneur and business advisor who was recruited by AudioEye, Inc. to assist with growth and strategic initiatives. Prior to joining AudioEye, he worked across finance, technology, and venture-backed businesses, advising founders and senior executives on strategy, capital formation, and operations. AudioEye recruited Mr. Kovacs because of that experience and network—not to serve as a compliance officer, regulator, or activist.

 

2. What triggered the dispute with AudioEye?

 

Mr. Kovacs states that in mid-2023 he encountered conduct that he believed would require him to participate in, or be complicit in, improper securities-related activity. He sought guidance internally on how to proceed without harming the company or violating the law. According to Mr. Kovacs, his refusal to participate in the conduct led to a breakdown in his relationship with company leadership.

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3. Did Mr. Kovacs want to become a whistleblower?

 

No. Mr. Kovacs did not want to be a whistleblower. He wanted to keep his job, protect the company, and avoid public conflict. He first attempted to raise concerns internally through Human Resources. When those efforts did not result in meaningful review, he raised the concerns with the Chairman of the Board. Shortly thereafter, Mr. Kovacs was terminated, and his ERISA-protected restricted stock was seized.

 

He contends that retaliation escalated from that point forward.

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4. What happened after Mr. Kovacs raised concerns?

 

According to Mr. Kovacs, his internal reporting was followed by escalation rather than containment, including termination for cause, loss of vested equity, reputational attacks, and litigation that he contends was aimed at discrediting him rather than addressing the substance of the concerns raised. Other witnesses have since provided sworn statements, some explaining that fear of retaliation delayed their coming forward.

 

5. Parts of the January 17, 2024 telephone call sounded troubling. What was the context?

 

The call occurred under extraordinary circumstances. At the time, Mr. Kovacs was being terminated from a company where he had worked for nearly a decade. More significantly, he was scheduled to undergo a major medical procedure. According to Mr. Kovacs, company leadership was aware of the upcoming surgery, and the timing of the termination was perceived as risking disruption to his medical care, materially intensifying the distress reflected in the call.

 

The conversation arose from a long-standing personal and professional relationship between Mr. Kovacs and Dr. Bettis, in which blunt and hyperbolic language had historically been used and understood as private. Mr. Kovacs acknowledges that the recording, when heard in isolation, sounds harsh and unflattering, and he does not defend the tone. Critically, however, no one has alleged that the substance of what he said was false.

 

Subsequent events are cited by Mr. Kovacs as corroborating the concerns he raised, including the sharp increase in AudioEye’s stock price following the effectiveness of the shelf registration. In his view, the issue is not tone, but accuracy—and he maintains that he was terminated shortly after reporting those concerns.

 

6. Are the allegations that Mr. Kovacs lied about his background or acted as a short-seller true—and why is he seeking to improve AudioEye’s governance?

 

No. These allegations are false.

 

Mr. Kovacs worked at AudioEye for nearly a decade and holds millions of dollars in restricted stock units whose value remains directly tied to the company. He contends those equity interests were wrongfully retained following his termination. Preserving and restoring corporate value is therefore personal, financial, and long-term for him.

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AudioEye and Mr. Moradi asserted in a Florida lawsuit filed in April 2024 that Mr. Kovacs lied about his professional or educational background and that he was a short-seller. Those accusations were reckless. Mr. Kovacs has never shorted AudioEye stock and has never encouraged or coordinated anyone else to do so. AudioEye has access to information that would readily confirm this fact.

 

Exhibit F to the Complaint rebuts each background-related smear in detail and cites contemporaneous documentary evidence. Mr. Kovacs contends that these statements—later repeated in press releases with worldwide distribution in February 2025 and at other times—were enormously harmful, and he is aggressively pursuing all available legal remedies.

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Mr. Kovacs further states that he sacrificed his career and significant personal stability by refusing to participate in conduct he believed would defraud shareholders. Since his termination, he has conducted what he describes as a careful investigation based on documents, sworn testimony, and market events. Based on that review, he sincerely believes that AudioEye’s Independent Directors may not fully appreciate the scope or seriousness of the issues involved. He is therefore placing the evidentiary record before them so they can exercise independent judgment with full information.

 

Mr. Kovacs does not deny having personal interests. He has been transparent that one of his objectives is preserving the value of his equity. He maintains, however, that his interests are aligned with those of long-term shareholders: strong governance, independent oversight, non-retaliation for internal reporting, and durable institutional credibility.