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.

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

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

Granted	3,000,000	0.33

Outstanding at June 30, 2014	4,000,000	$	0.36	2.31

For the three and six months ended June 30, 2014 and 2013, the Company has incurred performance share unit-based expense of $119,897 and $0, respectively, and $215,551 and $0, respectively.

For the three and six months ended June 30, 2014 and 2013, aggregate stock compensation expense related to the options, warrants and performance stock units totaled $423,257 and $168,542, respectively and $1,227,408 and $253,358, respectively. The aggregate stock compensation expense related to the options, warrants and performance stock units to be amortized through March 2017 is $2,147,341 as of June 30, 2014.