AUDIOEYE INC — Director's Dealing 2019

Aug 16, 2019

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: AUDIOEYE INC (AEYE)
CIK: 0001362190
Period of Report: 2019-08-14

Reporting Person: Sero Capital LLC (10% Owner)
Reporting Person: Moradi David (10% Owner)

Non-Derivative Transactions

Date	Security	Code	Shares	Price	A/D	Holdings After	Ownership
2019-08-14	Common Stock	X	590000	$1.63	Acquired	2246740	Indirect
2019-08-14	Common Stock	X	295000	$1.63	Acquired	2541740	Indirect
2019-08-14	Common Stock	X	42858	$4.07	Acquired	2584598	Indirect

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2019-08-14	Warrant (right to buy)	$2.50	J	590000	Disposed	2020-11-06	Common Stock (590000)	Indirect
2019-08-14	Warrant (right to buy)	$1.63	J	590000	Acquired	2020-11-06	Common Stock (590000)	Indirect
2019-08-14	Warrant (right to buy)	$2.50	J	295000	Disposed	2022-11-17	Common Stock (295000)	Indirect
2019-08-14	Warrant (right to buy)	$1.63	J	295000	Acquired	2022-11-17	Common Stock (295000)	Indirect
2019-08-14	Warrant (right to buy)	$6.25	J	42858	Disposed	2022-09-29	Common Stock (42858)	Indirect
2019-08-14	Warrant (right to buy)	$4.07	J	42858	Acquired	2022-09-29	Common Stock (42858)	Indirect
2019-08-14	Warrant (right to buy)	$1.63	X	590000	Disposed	2020-11-06	Common Stock (590000)	Indirect
2019-08-14	Warrant (right to buy)	$1.63	X	295000	Disposed	2022-11-17	Common Stock (295000)	Indirect
2019-08-14	Warrant (right to buy)	$4.07	X	42858	Disposed	2022-09-29	Common Stock (42858)	Indirect
2019-08-14	Warrant (right to buy)	$6.00	P	146667	Acquired	2020-08-14	Common Stock (146667)	Indirect

Holdings (Non-Derivative)

Security	Shares	Ownership
Common Stock	155169	Direct

Footnotes

F1: On August 14, 2019, Sero Capital LLC ("Sero Capital") entered into Omnibus Amendments to Common Stock Warrants (the "Amendments") with AudioEye, Inc. (the "Issuer") pursuant to which the exercise prices for several warrants to purchase common stock of the Issuer held by Sero Capital were adjusted. Pursuant to the Amendments, the exercise price for warrants to purchase 590,000 shares of the Issuer's common stock with an expiration date of November 6, 2020 was adjusted to a price of $1.63 per share, if the warrants were exercised on or before August 16, 2019, provided the warrants were exercised in full and the exercise price would be paid in cash, or $2.50, if the warrants were exercised after August 16, 2019.

F2: (continued from footnote 1) In addition, pursuant to the Amendments, the exercise price of warrants to purchase 295,000 shares of the Issuer's common stock with an expiration date of November 17, 2022 was adjusted to a price of $1.63 per share, if the warrants were exercised on or before August 16, 2019, provided the warrants were exercised in full and the exercise price would be paid in cash, or $2.50, if the warrants were exercised after August 16, 2019. Further, pursuant to the Amendments, the exercise price of warrants to purchase 42,858 shares of the Issuer's common stock with an expiration date of September 29, 2022 was adjusted to a price of $4.07 per share, if the warrants were exercised on or before August 16, 2019, provided the warrants were exercised in full and the exercise price would be paid in cash, or $6.25, if the warrants were exercised after August 16, 2019.

F3: Securities of the Issuer held directly by Sero Capital. David Moradi is the Managing Partner of Sero Capital and may be deemed to direct all voting and investment decisions made by Sero Capital.

F4: On August 14, 2019, Sero Capital exercised in full all of the warrants the exercise prices of which were adjusted pursuant to the Amendments.

F5: Securities of the Issuer held directly by David Moradi.

F6: On August 14, 2019, Sero Capital entered into a Loan Agreement (the "Loan Agreement") with the Issuer pursuant to which Sero Capital agreed to make advances to the Issuer in an amount up to $2,000,000 in the aggregate during a one-year term at an interest rate of 10% per annum. Interest payments on advances made under the Loan Agreement may be paid by the Issuer in either cash or in Issuer common stock, at the Issuer's option. In the event that the Issuer shall elect to make a payment of interest in the form of Issuer common stock, the number of shares issued by the Issuer with respect to each payment of interest shall be equal to the dollar amount of the applicable interest payment divided by the lesser of (x) $6.07, or (y) the volume weighted average trading price of the common stock for the five trading days immediately preceding the interest payment date.

F7: (continued from footnote 6) As consideration for entering into the Loan Agreement, on August 14, 2019, the Issuer issued to Sero Capital warrants to purchase 146,667 shares of Issuer common stock at an exercise price of $6.00 per share. Such warrants may be exercised for cash or on a cashless basis, provided that if the fair market value on the expiration date exceeds the exercise price on the expiration date, then the warrants will be deemed to have been exercised in full (to the extent not previously exercised) on a cashless basis on the expiration date. The number of shares purchasable upon the exercise of the warrants and the exercise price are subject to certain antidilution adjustments described in the warrants.