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 March 5, 2015, Paul Arena resigned as Chairman of the Board of Directors and Executive Chairman and was designated by AIM Group, Inc. as a consultant to the Company for the term of one year. On March 5, 2015, the Company and Mr. Arena, pursuant to a Separation and Release Agreement, agreed to the issuance of 500,000 restricted common shares in lieu of the January 27, 2014 issuance of 3,000,000 PSUs.

Below is a table summarizing the Company’s outstanding performance share units as of March 31, 2015 and December 31, 2014:

				Wtd Avg.
	Number of PSUs	Wtd Avg. Grant Price		Remaining Term
Outstanding at December 31, 2014	4,500,000	$	0.40	2.00

Forfeited	3,000,000	0.33		2.67


Outstanding at March 31, 2015	1,500,000	$	0.54	1.00

For the three months ended March 31, 2015 and 2014, the Company has incurred performance share unit-based expense of $127,486 and $95,653, respectively. For the three months ended March 31, 2015 and 2014, stock compensation expense related to the options, warrants and performance share units totaled $559,793 and $807,356, respectively. The total stock compensation expense related to the options, warrants and performance share units to be amortized through March 2018 is $2,110,036 as of March 31, 2015.