AEYE Reports Q2

It looks to me as if they are almost like IOU’s that they have received from their distributors.

The distributors say “In exchange for the licenses you give me now, I’ll work for you for free in the future (i.e. provide $150,000 in free services) as your distributor.”

As the distributor provides services in the future (signs up a customer, for example), AEYE will “expense” the IOU’s. In other words write them down from $150,000 to $130,000, for example, if they would otherwise pay $20,000 commission, without actually paying anything for the service provided .

Looking at it like that, it makes perfect sense.

This is not a normal agreement with a Distributor. The services that a distributor normally do like signing up customers, partners, holding events is their cost made from the margin of distributing the products they buy. Normally you would sell to the distributor at a deeper discount in order for them to make margin and then they do the value added services like additional sales staff that most companies can’t handle on their own.

But not sure if that is really what they have done as it was not clear in the release what the exchange for services was.