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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying unaudited interim financial statements
of Augme Technologies, Inc. (“Augme” or the “Company”) have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and
should be read in conjunction with the audited financial statements and notes thereto contained in Augme’s Annual Report
on Form 10-K filed with the Securities and Exchange Commission (“SEC”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations
for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate
the disclosures contained in the audited financial statements for the fiscal year ended February 29, 2012 as reported in the
Company’s Annual Report on Form 10-K have been omitted.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: left"><b><i>Description of Business</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Augme provides mobile marketing and advertising
technology and services, enabling brands, advertising agencies, media companies and enterprise clients to engage customers, drive
loyalty and increase sales. Augme’s AD LIFE mobile marketing technology platform allows marketers, brands, and agencies the
ability to plan, create, test, deploy, and track mobile marketing programs across every mobile channel. Through the use of Consumer
Response Tags (“CRTs”) such as 2D codes, UPC codes, Short Message Services (“SMS”), and image recognition,
AD LIFE facilitates consumer brand interaction and the ability to track and analyze campaign results. Using its own patented device-detection
and proprietary mobile content adaptation software, AD LIFE solves the mobile marketing industry problem of disparate operating
systems, device types, and on-screen mobile content rendering. Augme also provides business to consumer utilities including national
mobile couponing solutions, strategic mobile healthcare tools, custom mobile application development and consumer data tracking
and analytics.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Augme owns the “Method and System for Adding
Function to a Webpage” portfolio of patents, which cover technical processes and methods that are believed to be a foundational
component of behavioral targeting — the automatic provision of customized content to individuals based on information such
as past web activity, personal preferences, geography, or demographic data. The Company’s patent portfolio includes thirteen
issued patents and over 80 pending U.S. and foreign patent applications.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Augme operates under one reportable segment, is
headquartered in New York City and maintains an operations facility near Seattle, Washington.  Additionally, the Company
maintains a presence in Atlanta, Tucson, Dallas, Chicago, Miami, San Francisco and Los Angeles.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: left"><b><i>Liquidity</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business. As of November 30, 2012 and February 29, 2012, the Company had accumulated deficits of $87.4 million and $72.5 million,
respectively. The Company is subject to the risks and challenges associated with companies at a similar stage of development including
dependence on key individuals, challenges related to the successful development and marketing of its products and services, the
integration of business combinations, and competition from substitute products and services and larger companies with greater financial,
technical management and marketing resources. As of November 30, 2012, the Company had working capital of $2.9 million, and cash
and cash equivalents of $1.8 million. In order to fund existing operations for the remainder of fiscal 2013 and into fiscal 2014,
the Company will need to raise additional cash through equity or debt financings, and/or sell certain strategic assets, such as
its purchased technology or patent portfolio.  There is no certainty that the Company has the ability to raise additional
funds through debt or equity financings under terms acceptable to the Company, or that the Company has the ability to sell strategic
assets, which, if a sale is completed, may adversely affect ongoing operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company operates in the mobile marketing industry
and accordingly, can be affected by a variety of factors. For example, management of the Company believes that any of the following
factors could have a significant negative effect on the Company’s future financial position, results of operations and cash
flows: lack of cash and the ability to raise cash as and when needed; unanticipated fluctuations in quarterly operating results,
adverse changes in the Company’s relationship with significant customers or failure to secure contracts with other customers,
intense competition, failure to attract and retain key personnel, failure to protect intellectual property, decrease in the migration
trends from traditional advertising methods to digital and mobile media and the inability to manage growth.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In September 2012, the Company adopted a restructuring
plan which includes reducing the number of employees, slowing the pace of investments in our IP portfolio and minimizing variable
expenses. The Company is restructuring overall corporate overhead expenses in order to focus our business around our mobile marketing
and advertising technology and services. We intend to minimize cash spend while carefully investing our resources and protecting
our strategic assets to strengthen our position in the mobile marketing and mobile advertising industry. We believe that the restructuring
plan will improve cash flow by approximately $6.0 million on an annual basis.  Cash used to pay for costs associated
with one-time contract termination and termination benefits during the third quarter ended November 30, 2012 was $0.4 million.
We expect to use additional cash of $0.4 million during the fourth quarter of fiscal 2013 for restructuring.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In September 2012, we borrowed a total of $450,000
from two lenders. The loans were used for working capital. We borrowed  $250,000 from one lender.  This loan
bears interest at the rate of 12% per year and is due to be paid on the earlier of the first anniversary of the loan, the closing
of a financing transaction through which we raise gross proceeds of not less than $10 million, an event of default as defined in
the promissory note or upon a change of control as defined in the promissory note. In addition, we issued a note payable in the
amount of $200,000 to Ernest W. Purcell, a former director. This loan was paid in full in October 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 3, 2012, we completed a public
offering of our securities pursuant to which we sold 8.5 million shares of common stock registered on a Form S-3 registration
statement at a price to the public of $0.80 per share. We also issued warrants to purchase an additional 2.125 million shares
of common stock at an exercise price of $0.96 per share. We raised $6.2 million in proceeds, net of $0.6 million in costs related
to the offering, leaving approximately $48.0 million of the $75.0 million registered on the Form S-3 registration statement, which
we filed in June 2011. We intend to use the net proceeds from this offering for organic expansion in existing and new markets
and for general corporate purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. We regularly evaluate estimates and judgments based on historical experience
and other relevant facts and circumstances. Actual results could differ from those estimates. Significant estimates relate to
fair value of assets acquired and liabilities assumed in business combinations, acquisition related contingent consideration,
allowances for tax assets, the use of the Black-Scholes pricing model for valuing stock option and common stock warrant issuances,
estimates of future cash flows used to evaluate impairment of long-lived assets, revenues earned from percentage of completion
contracts and the period in which revenues should be recorded.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Reclassifications</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain reclassifications have been made to
prior periods to conform to current reporting. The presentation of our Consolidated Statements of Operations has been adjusted
for the reclassification of operating expenses to be presented in the following categories: sales and marketing, technology and
development, general and administrative and depreciation and amortization.  The operating expenses for the three and
nine months ended November 30, 2011 have been reclassified accordingly.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Summary of Significant Accounting Policies</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to
the rules and regulations of the SEC. The same accounting policies are followed for preparing the quarterly and annual financial
information unless otherwise disclosed in the notes below.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Goodwill</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company reviews goodwill for impairment annually
as of the first day of its fourth fiscal quarter, generally December 1<font style="font-size: 7pt">st</font>, and whenever events
or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The goodwill impairment test involves
a two-step process. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value
of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value
of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure
the amount of impairment loss, if any. If the implied fair value of the reporting unit's goodwill is less than the carrying value,
the difference is recorded as an impairment loss.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company estimates the fair value of its reporting
units using a weighting of fair values derived most significantly from the income approach and, to a lesser extent, the market
approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated
future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking
into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted
for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to
execute on the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings
derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit.
The weighting of the fair value derived from the market approach ranges from 0% to 50% depending on the level of comparability
of these publicly-traded companies to the reporting unit. When market comparables are not meaningful or not available, the Company
may estimate the fair value of a reporting unit using only the income approach.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">     </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In order to assess the reasonableness of the calculated
fair values of its reporting units, the Company also compares the sum of the reporting units' fair values to the Company’s
market capitalization and calculates an implied control premium (the excess of the sum of the reporting units' fair values over
the market capitalization). The Company evaluates the control premium by comparing it to control premiums of recent comparable
market transactions. If the implied control premium is not reasonable in light of these recent transactions, the Company will reevaluate
its fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions. As a result, when there
is a significant decline in the Company’s stock price, as occurred during fiscal 2012, this reevaluation could correlate
to lower estimated fair values for certain or all of the Company’s reporting units.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> The Company has a single operating segment,
however there two reporting units for purposes of its goodwill impairment assessment, and all of the recorded goodwill is attributed
to the Mobile Marketing and Advertising reporting unit, which generates substantially all of the revenues and expenses of the
Company.  The second reporting unit represents the Intellectual Property reporting unit, which does not contain any
attributed goodwill.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recently Issued Accounting Standards</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In July 2012, the FASB issued ASU 2012-02,
“Testing Indefinite-Lived Intangible Assets for Impairment.” ASU 2012-02 amends the guidance in ASC 350-30 on testing
indefinite-lived intangible assets, other than goodwill, for impairment.  Under ASU 2012-02, an entity has the option
of performing a qualitative assessment of whether it is more likely than not that the fair value of an entity’s indefinite-lived
intangible asset is less than its carrying amount before calculating the fair value of the asset. If the conclusion is that it
is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the company
would be required to calculate the fair value of the asset. ASU 2012-02 is effective for annual and interim impairment tests performed
for fiscal years beginning after September 15, 2012, with early adoption permitted. We early adopted this guidance as of August
31, 2012 in connection with our interim impairment assessment and it did not have a material impact on our financial position,
results of operations, or cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended November 30, 2012,
Augme issued 8.5 million shares of common stock in connection with a public offering, with proceeds of $6.2 million, net of $0.6
million in costs related to the offering. These shares were issued at $0.80 per share, and were registered on an S-3 registration
statement filed with the SEC which allows Augme to sell securities having a total value of up to $75.0 million.  There
is approximately $48.0 million in value of unsold securities remaining registered on the Form S-3.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended November 30, 2012,
Augme issued approximately 1.9 million shares of common stock in connection with the acquisition of all of the outstanding common
stock and preferred stock of a company, the assets of which comprise patents and intellectual property.  See Note 5.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended November 30, 2012,
Augme issued approximately 9.2 million shares of common stock as acquisition related contingent consideration in accordance with
the Amended and Restated Purchase Agreement between Augme and Hipcricket, Inc.  See Note 5.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended November 30, 2012,
Augme issued 500,000 shares of common stock to the Company’s legal counsel for services rendered to the Company related to
corporate transactions and SEC reporting.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Stock-based compensation cost is measured at the
grant date based on the estimated fair value of the award. We use the Black-Scholes option pricing model to estimate the fair value
of stock options and warrants. The determination of the fair value of stock-based awards on the date of grant using an option pricing
model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables
include our expected stock price volatility over the expected term of the awards, actual and projected employee stock option exercise
behaviors, a risk-free interest rate and any expected dividends.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b>OPTIONS:</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">The estimated fair values of our stock option
awards were determined using the following weighted average assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; text-align: left">Expected dividends</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Expected term (in years)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3.50</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3.50</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Weighted-average volatility</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">65.00</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">77.70</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">62.38</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">77.70</td>
<td nowrap="nowrap" style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Risk-free rate</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.43</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.40</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.44</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.40</td>
<td nowrap="nowrap" style="text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">The effect on our results of operations of recording
share-based compensation expense for the three and nine months ended November 30, 2012 and 2011 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; text-align: left">Selling and marketing</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">379,756</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">1,043,590</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">1,407,393</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 9%; text-align: right">2,104,527</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Technology and development</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">272,621</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">425,449</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">882,591</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">857,970</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.2pt; text-align: left">General and administrative</td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">534,876</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">846,961</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">1,389,460</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">1,708,001</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.4pt; text-align: left">Total stock-based compensation expense</td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">1,187,253</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">2,316,000</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">3,679,444</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">4,670,498</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company maintains stock incentive plans for
its employees. The 2010 Stock Incentive Plan provides for the grant to employees, officers, directors and consultants of options,
restricted shares, and other stock based awards to purchase up to an aggregate of 15,000,000 shares of the Company’s common
stock. The stock based awards may consist of both incentive stock options and non-qualified options.  The Company has
granted 13,056,707 stock options and restricted shares under this plan as of November 30, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has also issued non-qualified stock
options to consultants and vendors for services provided, as well as employees, including officers, directors and consultants.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of activity for Augme’s stock
options is presented below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Options</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Remaining Contractual Term</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(In Years)</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 56%; text-align: left">Options outstanding at February 29, 2012</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right">20,153,219</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 10%; text-align: right">2.13</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 15%; text-align: right">3.81</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Granted</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,850,268</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.48</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Exercised</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(572,092</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.53</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: left">Forfeited, cancelled and expired</td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(3,964,603</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left">)</td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right">2.41</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Options outstanding at November 30, 2012</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">18,466,792</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.04</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3.22</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Options vested and expected to vest at November 30, 2012</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">17,570,483</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.03</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3.18</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Options exercisable at November 30, 2012</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">12,491,061</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.96</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.84</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of November 30, 2012, there was $4.8 million
of unrecognized share-based payment expense, which is expected to be recognized over a weighted average period of approximately
2.0 years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate intrinsic value of the exercisable
options at November 30, 2012 was $90,000. The aggregate intrinsic value was calculated based on the positive differences between
the market value of the Company’s common stock on November 30, 2012 of $0.61 per share and the exercise prices of the exercisable
options.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The exercise prices of options outstanding at
November 30, 2012 ranged from $0.25 to $4.10.  The weighted average fair value of options granted was $0.61 per option
share for the nine months ended November 30, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate intrinsic value of options exercised
during the nine months ended November 30, 2012 was $0.8 million. The intrinsic value is calculated as the difference between the
market value on the date of exercise and the exercise price of the shares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b>WARRANTS:</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated fair values of our stock warrant
awards issued to service providers and employees were determined using the following weighted average assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; text-align: left">Expected dividends</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Term (in years)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5.00</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">4.75</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3. 9</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Weighted-average volatility</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">65.00</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">81.32</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">64.37</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">77.80</td>
<td nowrap="nowrap" style="text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Risk-free rate</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.62</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.40</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.59</td>
<td nowrap="nowrap" style="text-align: left">%</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.40</td>
<td nowrap="nowrap" style="text-align: left">%</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: right"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The warrant expense for the three and nine months
ended November 30, 2012 and 2011 is as follows, and is included in general and administrative expense:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: left">Total warrant expense</td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">188,849</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">1,193,943</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">622,915</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">2,339,790</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">The summary of activity for Augme’s warrants
is presented below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Number of Warrants</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Exercise Price</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Average Remaining Contractual Term (In Years)</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td colspan="3" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 56%; text-align: left">Warrants outstanding at February 29, 2012</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 10%; text-align: right">10,787,641</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 10%; text-align: right">1.86</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 15%; text-align: right">2.99</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Granted</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3,187,499</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.17</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Exercised</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(1,000,000</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.00</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: left">Forfeited, cancelled and expired</td>
<td style="padding-bottom: 1.2pt; text-align: right; font-weight: bold"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right; font-weight: bold">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: right; font-weight: bold"> </td>
<td style="text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: right; font-weight: bold">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Warrants outstanding at November 30, 2012</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">12,975,140</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.76</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.77</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Warrants vested and expected to vest at November 30, 2012</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">12,932,640</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.76</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.76</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Warrants exercisable and outstanding at November 30, 2012</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">12,312,642</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">1.76</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.69</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate intrinsic value of the exercisable
warrants at November 30, 2012 was zero. The aggregate intrinsic value was calculated based on the positive differences between
the market value of the Company’s common stock on November 30, 2012 of $0.61 per share and the exercise prices of the exercisable
warrants.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The exercise prices of warrants outstanding at
November 30, 2012 ranged from $0.90 to $4.00.  The weighted average fair value of warrants granted was $0.43 per warrant
share for the nine months ended November 30, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of November 30, 2012, there was $0.3 million
of unrecognized share-based payment expense, which is expected to be recognized over a weighted average period of approximately
2.2 years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The aggregate intrinsic value of warrants exercised
during the nine months ended November 30, 2012 was $0.6 million. The intrinsic value is calculated as the difference between the
market value on the date of exercise and the exercise price of the shares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Basic net income per share is based on the weighted
average number of common shares outstanding. Diluted net income per share is based on the weighted average number of common shares
and common share equivalents outstanding. Common share equivalents included in the computation represent shares issuable upon assumed
exercise of outstanding stock options and warrants except when the effect of their inclusion would be anti-dilutive. As of November
30, 2012, there were potentially dilutive securities consisting of options exercisable to purchase 2.2 million shares of common
stock, and no warrants exercisable. As the inclusion of these outstanding stock options would be anti-dilutive, they were excluded
from the computation of loss per share.  Accordingly, basic net loss per share and diluted net loss per share are identical
for each of the periods presented in the accompanying statements of operations.<font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Acquisition of Hipcricket, Inc. Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 25, 2011, Augme completed its acquisition
of the business and substantially all of the assets of Hipcricket, Inc. (“Hipcricket”) pursuant to the Amended and
Restated Asset Purchase Agreement (the “Agreement”) dated August 25, 2011 between Augme and Hipcricket. The acquisition
provides Augme with expanded mobile marketing solutions for consumer brands, agencies, pharmaceutical/health, and media companies.
The Company accounted for the acquisition as a business combination. The results of Hipcricket’s operations have been included
in the financial statements of the Company since the date of the acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated fair value of the acquisition consideration
was $62.8 million, which included $3.0 million in cash, $35.5 million in Augme’s common stock (11,457,359 shares at a price
of $3.10), a $1.0 million promissory note, which has been subsequently paid off in cash, and $2.0 million of seller tax liabilities,
which was paid during the quarter ended May 31, 2012. In addition, the transaction called for a twelve-month earn-out payment to
Hipcricket shareholders and employees, which if achieved was estimated to be no less than $15.0 million and as high as $27.5 million.
The earn-out period ended August 25, 2012. The amount of contingent consideration was based on the amount of revenue recognized
in the earn-out period to be paid in Augme’s common stock or a combination of common stock and cash at Augme’s discretion,
provided that the transaction remained a tax-free reorganization.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The contingent consideration recorded at the time
of the acquisition was $23.3 million plus the seller tax liabilities of $2.0 million, resulting in an aggregate liability on the
transaction date of $25.2 million. The tax liability of $2.0 million was paid during the quarter ended May 31, 2012. The contingent
consideration is determined based upon the revenue recognized during the earn-out period, and is paid 50% to former Hipcricket
shareholders and 50% to those former Hipcricket employees and employee-shareholders that became employees of Augme subsequent to
the acquisition. Based on an evaluation of the factors surrounding the transaction and the terms of the purchase agreement, the
amount due under the earn-out provisions is accounted for as acquisition consideration.  We concluded that the contingent
consideration to be paid to employees was a significant component of the transaction date valuation of the acquired business and
the calculation of the contingent payment was based upon factors established at the date of the transaction to be paid upon meeting
the established revenue criteria of the acquired business. The post transaction employment arrangements of the continuing employees
are at market rates and the formula for determining the contingent consideration is consistent with the business valuation methodologies,
based upon a multiplier of revenue recognized from the acquired business for the twelve month period following the business combination.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to the terms of the Agreement, the earn-out
period ended on August 25, 2012 and the contingent earn-out consideration was calculated to be $21,999,780. On August 25, 2012,
the measurement date of the contingent consideration obligation, the Company recognized a gain of $2,000,538 resulting from the
reduction of the liability as the actual consideration due pursuant to the terms of the Agreement was less than management’s
previous estimates.  The gain is included within other income on the statement of operations for the quarter ended August
31, 2012.  The Company paid the contingent consideration in both cash and common stock, as provided under the Agreement,
in transactions occurring on August 25, 2012 and November 2, 2012 for substantially most of the outstanding liability.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As partial satisfaction of the contingent acquisition
consideration obligation, Augme paid the former Hipcricket stockholders, representing approximately 50% of the outstanding contingent
consideration liability, using shares of its common stock. Pursuant to the terms of the Agreement, the number of common shares
issued was calculated using a $2.00 per share denominator, as the Company’s common stock price as calculated under the Agreement
was below the $2.00 “floor” as stated in the Agreement. Accordingly, Augme issued, in lieu of cash, a total of 5,500,036
shares of common stock in satisfaction of the contingent consideration totaling $10,999,890 owed to the former Hipcricket shareholders.
A total of 5,225,039 shares of common stock were issued during the quarter ended August 31, 2012 and the remaining 274,997 shares
were issued during the current quarter ended November 30, 2012. The market price of the common stock on August 25, 2012 was $1.48.  The
difference between the $2.00 per share price used to calculate the number of shares to be issued per the terms of the Agreement,
and the actual price of the shares of $1.48 on the measurement date, resulted in a reduction in the acquisition consideration payment
of $2,860,019 which amount was included within other income on the statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On November 2, 2012, Augme issued 3,734,835 shares
of its common stock as form of payment, net of tax withholding, for the remaining contingent earn-out consideration in accordance
with the Agreement. On December 4, 2012, this amount was reduced by 27,322 shares to 3,707,513 shares. The difference between the
$2.00 per share price used to calculate the number of shares to be issued per the terms of the Agreement, and the actual price
of the shares of $0.65 on the measurement date, which is the date on which the Company issued the shares, resulted in a reduction
in the acquisition consideration payment of $7,339,173 which amount was included within other income on the statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the change in Level 3
acquisition related contingent consideration liability measured on a recurring basis for the three months ended November 30, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>August 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2012</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Cash and Stock Payments</td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Gain)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b> Included in Earnings</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">November 30, 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="3" style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Acquisition related contingent consideration</td>
<td style="text-align: left">$</td>
<td style="text-align: right">10,999,890</td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">(3,621,056)</td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">(7,339,173)</td>
<td style="text-align: left; font-size: 7pt">(1)</td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">39,661</td>
<td style="text-align: left"> </td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 3%; text-align: left; font-size: 7pt">(1)</td>
<td style="width: 87%; text-align: left">Included in other income in the statements of operations.</td>
<td style="width: 8%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the change in Level 3
acquisition related contingent consideration liability measured on a recurring basis for the nine months ended November 30, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>February 29,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2012</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Cash and Stock Payments</td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Gain)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b> Included in Earnings</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">November 30, 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="3" style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: right"> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Acquisition related contingent consideration</td>
<td style="text-align: left">$</td>
<td style="text-align: center">26,000,500</td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">(13,761,109)</td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">(12,199,730)</td>
<td style="text-align: left; font-size: 7pt">(1)</td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">39,661</td>
<td style="text-align: left"> </td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 3%; text-align: left; font-size: 7pt">(1)</td>
<td style="width: 86%; text-align: left">Included in other income in the statements of operations.</td>
<td style="width: 7%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b><i>Unaudited Pro-Forma Results of Operations
for Hipcricket Acquisition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The results of this acquisition are included in
the financial statements from the date of acquisition. The unaudited pro-forma results of operations data are being furnished solely
for informational purposes and are not intended to represent or be indicative of the results of operations that we would have reported
had the Hipcricket acquisition been completed at the beginning of the fiscal periods presented, nor are they necessarily indicative
of future results. Pro-forma results include the discount of the present value of the contingent consideration over the period
presented. The pro-forma results of operations for the nine months ended November 30, 2011 are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Nine Months Ended November 30, 2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 82%; text-align: left">Revenues</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 15%; text-align: right">11,851,321</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Net loss</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(21,985,225</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Weighted average common shares</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">82,905,010</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Basic and diluted net loss per share</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">(0.27</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><font style="font-size: 8pt">  </font><b><i>Asset
Acquisition – Patents and Intellectual Property</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 24, 2012, the Company acquired all of the
common stock and all of the preferred stock of Geos Communications IP Holdings, Inc. (“Geos IP”).  By acquiring
the Geos IP stock, the Company acquired 5 U. S. patents covering Voice over Internet Protocol (“VoIP”) and other mobility
inventions and 7 U.S. patent applications and 18 pending international patent applications covering related invention families
within the field of mobile VoIP. The patents allow the Company to expand its mobile marketing and mobile advertising technology
offerings to include adaptive voice technologies for any mobile environment, VoIP-enabled mobile marketing and advertising, VoIP-enabled
e-commerce and VoIP-enabled services and support features within the Company’s AD LIFE mobile marketing and mobile advertising
platform.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company determined that the Geos IP assets
acquired did not constitute a business as defined under ASC Topic 805 on the basis that the Geos IP assets were not an integrated
set of activities or assets that were capable of being conducted or managed in a manner that would provide economic benefits or
return to the Company.  As a result, the Company accounted for this acquisition as an asset purchase.  The
total consideration paid has been allocated to the intangible assets acquired based upon their relative fair values at the date
of acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair value of the consideration given for
the acquisition of the Geos IP stock was $4.2 million, which included $355,000 in cash and $3.8 million in Augme’s common
stock (1,860,465 shares at a price of $2.05 per share). The Company is indemnified against certain losses resulting from breaches
of any representation, warranty, covenant or agreement of Geos IP. In order to secure payment of any loss, the approximate 1.9
million shares of Augme’s common stock will be held for the benefit of the sellers in escrow for a period of up to 14 months
following the closing date of the acquisition. See Note 9 for details regarding the direct and indirect material interest of key
management personnel in the acquisition. During the period ended November 30, 2012, the Company recognized an impairment write-down
of the acquired Geos IP and the IP acquired from JAGTAG.  See Note 7.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During period ended November 30 2012, the
Company determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment
analysis for the Mobile Marketing and Advertising reporting unit, the only reporting which has allocated goodwill.
These indicators included the recent trading values of the Company’s stock, coupled with market conditions, recurring
losses and the restructuring undertaken during the period. Upon completion of our initial qualitative assessment, we could
not conclude that it was more likely than not that the fair value of the Mobile Marketing and Advertising reporting unit was
more than the carrying amount, and therefore we performed the first step of the two-step process for evaluating the
recoverability of recorded goodwill. The first step of this interim period goodwill impairment assessment compared the fair
value of the related reporting unit with its carrying amount, including goodwill. The result of the first step of the
Company’s interim period assessment of the recoverability of goodwill did not result in an indication of
impairment.  As such, step two was not completed and no impairment charge related to goodwill has been recorded
during the period.  The fair value of the Mobile Marketing and Advertising reporting unit was based on the income approach and the
market approach.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Prior to completing the goodwill impairment test,
the Company tested the recoverability of the Mobile Marketing and Advertising reporting unit long-lived assets (other than goodwill)
and concluded that such assets were not impaired for this reporting unit. The Company also performed a test of the recoverability
of the Intellectual Property Holding (“IP Holding”) reporting unit, which resulted in an impairment of long-lived intangible
assets (see Note 7).  However, no goodwill is allocated to the IP Holding reporting unit.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The result of the interim period impairment test
did not result in an indication of impairment.  However, any further reductions in the assessed fair value of the reporting
unit greater than approximately 8 - 12%, or a deterioration of the related fair value inputs, would likely result in an impairment
charge in the period of such assessment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company will perform its annual impairment
test during the fourth quarter.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><b><i>Impairment of Patents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Our intangible assets are reviewed for recoverability
whenever an event or change in circumstance indicates that the carrying amount of such intangible asset or group of intangible
assets may not be recoverable. As a result of efforts undertaken in the third quarter to market certain patents for sale, and as
a result of the interim period goodwill impairment assessment (see Note 6), management concluded that a triggering event has occurred
requiring us to assess whether the carrying amount of certain of our intellectual property assets is recoverable.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Identified intangible assets are included in both
reporting units of our single operating segment, however the intellectual property for which indications of impairment existed
are included in the IP Holding reporting unit, and those assets that were identified as  impaired amounted to a net carrying
value of $9.3 million prior to the impairment write-down.  In conducting an impairment review of the intangible assets,
the Company compares the fair value of the asset to its carrying value. If the fair value of the asset is less than the carrying
value, the difference is recorded as an impairment loss. The Company estimated the fair value of the patents subject to the impairment
analysis by calculating the expected proceeds to be received through a sale, exclusive license agreement and royalties that would
have been paid to a third party had the Company not owned the patents. The expected proceeds to be received through a sale did
not include an estimate of contingent fees to be received by the company related to participating in future licensing fees received
by a purchaser, if any, under future settlement or royalty arrangements in which they pursue.  Such fees are considered
contingent gains and will be recognized when earned.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Following the completion of that analysis, the
Company determined that the fair value of the patents acquired in the Geos IP asset acquisition and the JAGTAG business combination,
which are not core to the ongoing business operations or utilized in any material manner by the Mobile Marketing and Advertising
reporting unit, were less than the carrying value due primarily to the reduction in the expected future cash flows to be received
through licensing or sale, as the Company has restructured and changed its strategy related to certain non-core assets. As a result,
the Company recorded an impairment charge of $5.6 million in the third quarter of fiscal 2013, which was included in the Impairment
of long-lived identified intangibles and decline in fair value of long-term investment within consolidated the statement of operations..</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The interim impairment assessment utilized Level
3 inputs to estimate the fair value of the IP patents.  We applied a discounted cash flow model based on certain scenarios,
but significantly weighted towards outright sale given management’s intent to dispose or exclusively license the rights to
these non-core IP assets.  In estimating the fair value of these patents, we used our own assumptions about the use of
the patents by a market participant and considered all available evidence. However, as our efforts to sell certain of our IP patents
progresses, additional evidence may emerge that could result in an additional charge that is required to be recorded in subsequent
periods.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The fair values of the GEOS and JAGTAG IP
patents are presented as Intangible assets available for sale in the consolidated balance sheets, as the Company obtained
approval of the board prior to November 30, 2012 to market the patents for sale, and management believes it is probable that
such sale will occur within the near future, but in any event no longer than twelve months.  We will discontinue the
future amortization of the $3.5 million of patents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">The following table presents the gross carrying
value of the components of intangible assets and accumulated amortization:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="18" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">As of November 30, 2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Weighted Average Amortization Period (In months)</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: center; font-weight: bold">Gross</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Impairment Loss</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Transfer to Held for Sale</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Net Carrying Value</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; font-weight: bold"> </td>
<td colspan="2" style="text-align: center; font-weight: bold">Carrying</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="text-align: left; font-weight: bold"> </td>
<td colspan="2" style="text-align: center; font-weight: bold">Accumulated</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Amount</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: center; font-weight: bold; border-bottom: Black 2pt solid">Amortization</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; font-style: italic; font-weight: bold; text-indent: 0.25in">Indefinite Lived Intangible:</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left"> Trade name</td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right">Indefinite</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">8,700,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">8,700,000</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left; font-style: italic; font-weight: bold; text-indent: 0.25in">Definite Lived Intangibles:</td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 28%; text-align: left">Patent litigation</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">84</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">8,195,037</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">1,709,382</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">—</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">—</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">6,485,655</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Patents</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">120</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">10,974,393</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,034,124</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,649,160</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3,500,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">795,109</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> Acquired technology</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">60</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,270,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,102,250</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,167,750</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Customer relationships</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">60-72</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">12,850,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3,509,375</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">9,340,625</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Software</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">36</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,095,706</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,095,706</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left"> Non-compete agreements</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">36</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">212,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">212,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: left">Trade names</td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right">24</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: left">Total intangibles</td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">50,341,136</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">10,702,837</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">5,649,160</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">3,500,000</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">30,489,139</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="11" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">As of February 29, 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Weighted Average Amortization Period (In months)</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Gross</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Carrying</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Amount</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Accumulated</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Amortization</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: left; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Net Carrying Value</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; font-style: italic; font-weight: bold">Indefinite Lived Intangible:</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="3" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">   Trade name</td>
<td style="text-align: right"> </td>
<td colspan="2" style="text-align: right">Indefinite</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">8,700,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">—</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">8,700,000</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left; font-style: italic; font-weight: bold">Definite Lived Intangibles:</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="text-align: left"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 52%; text-align: left">   Patent litigation</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">84</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">5,471,107</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">950,150</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right">4,520,957</td>
<td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">   Patents</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">120</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,340,300</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">292,297</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,048,003</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">   Acquired technology</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">60</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,270,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,011,750</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,258,250</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">   Customer relationships</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">60-72</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">12,850,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,605,625</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">11,244,375</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">   Software</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">36</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,095,706</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,095,706</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">—</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">   Non-compete agreements</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">36</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">212,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">185,500</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">26,500</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: left">   Trade names</td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right">24</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: left"> </td>
<td style="padding-bottom: 1.2pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: left"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">—</td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: left">Total intangibles</td>
<td style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">42,983,113</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">6,185,028</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="padding-bottom: 2.4pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">36,798,085</td>
<td style="padding-bottom: 2.4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Intangible assets relate to patent filing and
patent protection litigation costs as well as customer relationships, trade names and technology obtained in past acquisitions,
including the acquisitions of Hipcricket and JAGTAG during fiscal 2012. With the exception of the Hipcricket trade name carried
at $8.7 million, the intangible assets have finite lives and, as such, are subject to amortization.  Amortization of
intangible assets was $1.5 million and $4.5 million for the three and nine months ended November 30, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left">Amortization in future fiscal periods is expected
to be as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 60%; text-align: left">Remainder of 2013</td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 3%; text-align: left">$</td>
<td style="width: 35%; text-align: right">1,411,869</td>
<td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">2014</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: right">5,247,475</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">2015</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: right">5,163,725</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">2016</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: right">5,014,517</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">2017</td>
<td style="text-align: left"> </td>
<td colspan="2" style="text-align: right">2,997,523</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: left">Thereafter</td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: right">2,054,030</td>
<td style="padding-bottom: 1.2pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: left">Total</td>
<td style="padding-bottom: 2.4pt; text-align: left"> </td>
<td style="border-bottom: black 2.25pt double; text-align: left">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">21,789,139</td>
<td style="padding-bottom: 2.4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Litigation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the normal course of business, we may become
involved in various legal proceedings.  Except as stated below, we know of no pending or threatened legal proceeding
to which we are or will be a party that, if successful, might result in a material adverse change in our business, properties or
financial condition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Litigation Update</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. Tacoda, Inc.
and AOL, Inc.</i></b>, Civil Action No. 1:07-cv-07088-CM-GWG (the “Tacoda litigation”), a patent infringement
lawsuit pending in the U.S. District Court for the Southern District of New York since August 2007.  The Court ruled
that the temporal scope of the Tacoda case was limited to the period before AOL began to integrate Tacoda’s systems into
its own systems.  Defendants represented that such integration commenced on September 28, 2007.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 24, 2012, Augme covenanted not to sue
the defendants for any infringing activities related to the accused Tacoda systems before September 28, 2007 and thus, Augme voluntarily
dismissed all claims against the defendants.  The Stipulation of Voluntary Dismissal specifically noted that the Covenant
Not To Sue would not preclude enforcement of Augme’s suits against AOL Inc., AOL Advertising, Inc. and Time Warner, as well
as against AOL, Inc. and Gannett Co., Inc.<i> </i>The Court entered an order dismissing the case on September 4, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. AOL, Inc.,
AOL Advertising, Inc. and Time Warner, Inc.</i></b>, Civil Action No. 1:12-cv-05439-CM (transferred from Civil Action No. 1:09-cv-04299-RWS
(S.D.N.Y.)), a patent infringement and trademark infringement lawsuit pending in the U.S. District Court for the Southern District
of New York (transferred from the U.S. District Court for the Central District of California) since September 10, 2008.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 13, 2012, the patent infringement claims
were transferred from Judge Robert Sweet to Judge Colleen McMahon.  The residual claims for trademark infringement, unfair
competition and false designation of origin, which remained with Judge Sweet, were dismissed by agreement of the parties on November
19, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">With regards to the patent infringement claims,
Time Warner filed a Motion for Judgment on the Pleadings on September 27, 2012, and, shortly thereafter, a Motion for Rule 11 Sanctions
on October 23, 2012.  On October 26, 2012, the Court <i>sua sponte</i> stayed the case regarding any claims related to
U.S. Patent No. 7,269,636, pending the outcome of the ongoing reexamination by the United States Patent and Trademark Office.  Because
the remaining patent-in-suit, U.S. Patent Nos. 6,594,691, is closely related to the ‘636 patent, Augme moved to stay the
case in its entirety on November 5, 2012. All three motions are pending before the Court.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> Fact discovery is currently scheduled to
be completed by the end of February 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. Gannett
Co., Inc., LucidMedia Networks, Inc. and AOL, Inc.</i></b>, Civil Action No. 1:11-cv-05193-CM (previously <i>Augme
Technologies, Inc. v. Gannett Co., Inc., LucidMedia Networks, Inc. and AOL, Inc.</i>, Civil Action No. 3:11-cv-00282-HEH
(E.D.Va.)), a patent infringement lawsuit filed in the U.S. District Court for the Eastern District of Virginia on April 29,
2011, subsequently transferred to the U.S. District Court for the Southern District of New York.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 24, 2011, LucidMedia Networks, Inc. filed
a counterclaim against Augme in the U.S. District Court for the Eastern District of Virginia.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 26, 2012, Augme announced a final settlement
agreement was reached with LucidMedia. LucidMedia’s counterclaims against Augme, pending in the Eastern District of Virginia,
were dismissed pursuant to the settlement as well as Augme’s claims against LucidMedia pending in the Southern District of
New York. The case is still pending with regards to the remaining defendants, and the parties have been engaged in the early stages
of discovery. The parties’ Opening Claim Construction briefs were submitted on June 22, 2012, and the Court issued its ruling
on the disputed claim terms on August 28, 2012.  The Court required supplemental <i>Markman </i>briefing on one disputed
claim term to be submitted by October 5, 2012.  The parties are awaiting the Court’s decision on the construction
of the remaining claim term, at which point discovery will resume.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. Yahoo!
Inc.</i></b>, Civil Action No. 3:09-cv-05386-JCS, a patent infringement lawsuit pending in the U.S. District Court for the
Northern District of California since November 16, 2009.  On December 21, 2010, Yahoo! filed a first amended answer
to Augme’s complaint, in which Yahoo! asserted its own counterclaim against Augme alleging infringement of, <i>inter alia</i>,
U.S. Patent No. 7,640,320.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">With respect to Augme’s claims of patent
infringement, on June 11, 2012, Yahoo! renewed its Motion for Summary Judgment of non-infringement. The Court heard argument on
the summary judgment issues on July 20, 2012.  On August 8, 2012, the Court granted Yahoo!’s Motion for Summary
Judgment of non-infringement, dismissing Augme’s patent claims against Yahoo! and declining to address Augme’s previously
filed Motion for Partial Summary Judgment of validity.  Based on the Court’s summary judgment order, Augme moved
for Entry of Judgment under Rule 54(b).  Yahoo! opposed Augme’s motion in light of the pending counterclaim for
infringement of the ‘320 patent.  Nonetheless, Augme’s motion was granted by the Court on October 29, 2012,
and final judgment was entered shortly thereafter on November 15, 2012.  On December 12, 2012, Augme filed a Notice of
Appeal with the district court.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">With respect to Yahoo!’s counterclaim regarding
infringement of the ‘320 patent, the parties agreed to and filed a stipulation of infringement of this patent on December
13, 2012, under the Court’s claim construction ruling of January 3, 2012.  The parties also stipulated to entry
of judgment under Rule 54(b) and 28 U.S.C. § 1292(c)(2), which permits the entry of judgment in patent cases “which
… [are] final except for an accounting.”  The parties also requested that the Court stay the remainder of
the case pending Augme’s appeal to the Federal Circuit Court of Appeals.  The Court signed such an order on December
13, 2012, and entered it the next day.  Augme’s Notice of Appeal to the Federal Circuit Court of Appeals regarding
the stipulated infringement of Yahoo!’s ‘320 patent is due to be filed on Monday, January 14, 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. Pandora, Inc.</i></b>,
Civil Action No. 1:11-cv-00379, a patent infringement lawsuit pending in the U.S. District Court for the District of Delaware
as of April 29, 2011. A <i>Markman </i>hearing was held on February 27, 2012. The Court issued its claim construction
order on December 5, 2012.  Fact discovery has concluded, and initial expert reports are due on February 4, 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. Velti,
USA</i></b>, Civil Action No. 1:12-cv-00294, a patent infringement lawsuit pending in the U.S. District Court for the District
of Delaware as of March 9, 2012.  Augme has filed a patent infringement lawsuit in the United States District Court
of Delaware against Velti USA, Inc., a global provider of mobile marketing and advertising technology and solutions. Augme
is asserting three causes of action involving alleged patent infringement related to Augme-owned United States Patent No. ‘721
(“Method and Code Module for Adding Function to a Web Page”), United States Patent No. ‘636 (“Method
and Code Module For Adding Function to a Web Page”) and United States Patent No. ‘691 (“Method and System
for Adding Function to a Web Page”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 4, 2012, Velti filed a Motion to Dismiss
For Failure to State a Claim Under Federal Rule of Civil Procedure 12(b)(6), but withdrew its Motion once Augme filed its First
Amended Complaint. Velti then filed its Answer to the Amended Complaint on June 4, 2012.  After a Rule 16 scheduling
teleconference was conducted with the Court on September 19, 2012, the Court entered a Scheduling Order which set the case for
a seven day jury trial beginning on June 16, 2014.  In the meantime, the case has been referred to Magistrate Judge Sherry
R. Fallon for the purpose of exploring Alternative Dispute Resolution.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Augme Technologies, Inc. v. Millennial
Media, Inc.</i></b>, Civil Action No. 1:12-cv-00424, a patent infringement lawsuit pending in the U.S. District Court
for the District of Delaware as of April 5, 2012. Augme filed a case against Millennial Media, Inc., asserting three
causes of action involving alleged patent infringement related to Augme-owned United States Patent No. 7,783,721 (“Method
and Code Module for Adding Function to a Web Page”), United States Patent No. 7,269,636 (“Method and Code Module
For Adding Function to a Web Page”) and United States Patent No. 6,594,691 (“Method and System for Adding Function
to a Web Page”).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 30, 2012, Millennial Media filed a Motion
to Dismiss For Failure to State a Claim Under Federal Rule of Civil Procedure 12(b)(6). Augme filed an amended complaint and an
answer brief on June 18, 2012, and Millennial Media withdrew its Motion to Dismiss on June 28, 2012.  A Scheduling Order
was entered on September 28, 2012.  The case has been set for a seven day jury trial beginning on September 15, 2014.  In
the meantime, the case has been referred to Magistrate Judge Sherry R. Fallon for the purpose of exploring Alternative Dispute
Resolution.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>The Reexamination of the ‘636 Patent.  </i></b>In
connection with Yahoo!’s defense of Augme’s claims in the counterclaim asserted in Augme Technologies, Inc. v.
Yahoo! Inc., on August 31, 2011, Yahoo! filed a Request for Inter Partes Reexamination of Augme’s U.S. Patent No. 7,269,636
(Reexamination Control No. 95/001,734).  The United States Patent and Trademark Office granted Yahoo!’s request in a
Reexamination Grant Order mailed on November 30, 2011. On August 14, 2012, the Examiner responsible for this reexamination proceeding
issued a non-final Action Closing Prosecution, in which he rejected claims 1-4, 9, 14, 20, 21 and 25.  The other claims of
the ‘636 patent are not subject to reexamination.  On September 14, 2012, Augme filed a Response to the Action Closing
Prosecution, responding to the grounds for rejection presented by the Examiner.  On October 15, 2012, Yahoo! submitted its
comments to Augme’s September 14 Response to the Action Closing Prosecution.  Currently, this matter remains pending.<font style="font-size: 8pt"> 
</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>The Reexamination of the ‘320 Patent.
</i></b>In connection with Augme’s defense against Yahoo!’s counterclaim in Augme Technologies, Inc. v. Yahoo!
Inc., on October 26, 2011, Augme filed a Request for Inter Partes Reexamination of Yahoo!’s U.S. Patent No. 7,640,320 (Reexamination
Control No. 95/001,794).  The United States Patent and Trademark Office issued an Order Granting Augme’s Request for
Inter Partes Reexamination on December 20, 2011. On the same day, the Examiner issued an Office Action rejecting claims 1-4 and
6-10 of the ‘320 patent.  On February 21, 2012, Yahoo! filed a Response to the December 20 Office Action, and on March
22, 2012, Augme submitted its comments in light of the December 20 Office Action and Yahoo!’s February 21 Response. 
Shortly thereafter, on April 19, 2012, the Examiner issued an Action Closing Prosecution confirming claims 3 and 9, and rejecting
claims 1,2,4, 6-8 and 10.  Yahoo! filed comments in response on May 21, 2012, and Augme did the same on June 20, 2012. The
Examiner then issued a Right of Appeal Notice (“RAN”) on July 31, 2012, withdrawing the previous rejections and confirming
claims 1-4 and 6-10.  Augme appealed this decision to the Board of Appeals on August 31, 2012 and filed its brief on October
31, 2012.  Yahoo! filed its rebuttal brief on November 30, 2012. Currently, this matter remains pending.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Brandofino Communications vs. Augme Technologies, Inc.
</i></b>On September 27, 2011 Brandofino Communications, Inc. (“Brandofino”) filed suit against Augme and
New Aug LLC in the Supreme Court of the State of New York, New York County. The complaint alleges, <i>inter alia</i>, breach of
contract and unjust enrichment claims arising from work Brandofino allegedly performed for Augme pursuant to a marketing agreement
entered into by Brandofino and Augme. Augme has served its Answer and set forth counterclaims for breach of contract, unfair competition,
tortious interference with business relations, and violations of New York General Business Law Section 349 (relating to violations
of Augme’s intellectual property rights). The Company intends to vigorously defend against Brandofino’s claim and pursue
its counterclaims.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the quarter ended November 30, 2012, three
customers accounted for approximately 9.0 percent, 6.2 percent and 5.3 percent of the Company’s revenue and no other
customer accounted for over 5 percent of revenues.  During the quarter ended November 30, 2011 there were three customers
that accounted for approximately 23 percent of revenues.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended November 30, 2012,
two customers accounted for approximately 9.9 percent and 7.4 percent of the Company’s revenue and no other customer accounted
for over 5 percent of revenues.  During the nine months ended November 30, 2011 there were three customers that accounted
for approximately 23 percent of revenues.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At November 30, 2012, three customers accounted
for 29 percent of accounts receivable, the largest of which accounted for 11.7 percent.  At February 29, 2012, three
customers accounted for 25 percent of accounts receivable, the largest of which accounted for 10.8 percent.</p>
36798085
21789139
9340625
5167750
795109
6485655
26500
11244375
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6048003
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2095706
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10974393
8195037
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2095706
12850000
7270000
6340300
5471107
8700000
8700000
P72M
P24M
P36M
P36M
P60M
P60M
P120M
P84M
P24M
P36M
P36M
P72M
P60M
P60M
P120M
P84M
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3500000
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1411869
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2054030
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4500000
8700000
0.09
0.099
0.062
0.074
0.053
0.23
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0.05
0.05
0.117
0.108
0.29
0.25
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As of November 30, 2012 and February 29, 2012, the Company had accumulated deficits
of $87.4 million and $72.5 million, respectively. The Company is subject to the risks and challenges associated with companies
at a similar stage of development including dependence on key individuals, challenges related to the successful development and
marketing of its products and services, the integration of business combinations, and competition from substitute products and
services and larger companies with greater financial, technical management and marketing resources. As of November 30, 2012, the
Company had working capital of $2.9 million, and cash and cash equivalents of $1.8 million. In order to fund existing operations
for the remainder of fiscal 2013 and into fiscal 2014, the Company will need to raise additional cash through equity or debt financings,
and/or sell certain strategic assets, such as its purchased technology or patent portfolio.  There is no certainty that
the Company has the ability to raise additional funds through debt or equity financings under terms acceptable to the Company,
or that the Company has the ability to sell strategic assets, which, if a sale is completed, may adversely affect ongoing operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The
Company operates in the mobile marketing industry and accordingly, can be affected by a variety of factors. For example, management
of the Company believes that any of the following factors could have a significant negative effect on the Company’s future
financial position, results of operations and cash flows: lack of cash and the ability to raise cash as and when needed; unanticipated
fluctuations in quarterly operating results, adverse changes in the Company’s relationship with significant customers or
failure to secure contracts with other customers, intense competition, failure to attract and retain key personnel, failure to
protect intellectual property, decrease in the migration trends from traditional advertising methods to digital and mobile media
and the inability to manage growth.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
September 2012, the Company adopted a restructuring plan which includes reducing the number of employees, slowing the pace of
investments in our IP portfolio and minimizing variable expenses. The Company is restructuring overall corporate overhead expenses
in order to focus our business around our mobile marketing and advertising technology and services. We intend to minimize cash
spend while carefully investing our resources and protecting our strategic assets to strengthen our position in the mobile marketing
and mobile advertising industry. We believe that the restructuring plan will improve cash flow by approximately $6.0 million on
an annual basis.  Cash used to pay for costs associated with one-time contract termination and termination benefits
during the third quarter ended November 30, 2012 was $0.4 million. We expect to use additional cash of $0.4 million during the
fourth quarter of fiscal 2013 for restructuring.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">In
September 2012, we borrowed a total of $450,000 from two lenders. The loans were used for working capital. We borrowed  $250,000
from one lender.  This loan bears interest at the rate of 12% per year and is due to be paid on the earlier of the first
anniversary of the loan, the closing of a financing transaction through which we raise gross proceeds of not less than $10 million,
an event of default as defined in the promissory note or upon a change of control as defined in the promissory note. In addition,
we issued a note payable in the amount of $200,000 to Ernest W. Purcell, a former director. This loan was paid in full in October
2012.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">On October 3, 2012, we completed a public offering
of our securities pursuant to which we sold 8.5 million shares of common stock registered on a Form S-3 registration statement
at a price to the public of $0.80 per share. We also issued warrants to purchase an additional 2.125 million shares of common
stock at an exercise price of $0.96 per share. We raised $6.2 million in proceeds, net of $0.6 million in costs related to the
offering, leaving approximately $48.0 million of the $75.0 million registered on the Form S-3 registration statement, which we
filed in June 2011. We intend to use the net proceeds from this offering for organic expansion in existing and new markets and
for general corporate purposes.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of financial statements in
conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. We regularly evaluate estimates and judgments based on historical experience
and other relevant facts and circumstances. Actual results could differ from those estimates. Significant estimates relate to fair
value of assets acquired and liabilities assumed in business combinations, acquisition related contingent consideration, allowances
for tax assets, the use of the Black-Scholes pricing model for valuing stock option and common stock warrant issuances, estimates
of future cash flows used to evaluate impairment of long-lived assets, revenues earned from percentage of completion contracts
and the period in which revenues should be recorded.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Certain reclassifications have been made to
prior periods to conform to current reporting. The presentation of our Consolidated Statements of Operations has been adjusted
for the reclassification of operating expenses to be presented in the following categories: sales and marketing, technology and
development, general and administrative and depreciation and amortization.  The operating expenses for the three and
nine months ended November 30, 2011 have been reclassified accordingly.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to
the rules and regulations of the SEC. The same accounting policies are followed for preparing the quarterly and annual financial
information unless otherwise disclosed in the notes below.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In July 2012, the FASB issued ASU 2012-02,
“Testing Indefinite-Lived Intangible Assets for Impairment.” ASU 2012-02 amends the guidance in ASC 350-30 on testing
indefinite-lived intangible assets, other than goodwill, for impairment.  Under ASU 2012-02, an entity has the option
of performing a qualitative assessment of whether it is more likely than not that the fair value of an entity’s indefinite-lived
intangible asset is less than its carrying amount before calculating the fair value of the asset. If the conclusion is that it
is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the company
would be required to calculate the fair value of the asset. ASU 2012-02 is effective for annual and interim impairment tests performed
for fiscal years beginning after September 15, 2012, with early adoption permitted. We early adopted this guidance as of August
31, 2012 in connection with our interim impairment assessment and it did not have a material impact on our financial position,
results of operations, or cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated fair values of our stock option
awards were determined using the following weighted average assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; text-align: justify">Expected dividends</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Expected term (in years)</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3.50</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">5</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3.50</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">5</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Weighted-average volatility</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">65.00</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">77.70</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">62.38</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">77.70</td>
<td nowrap="nowrap" style="text-align: justify">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Risk-free rate</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.43</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.40</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.44</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.40</td>
<td nowrap="nowrap" style="text-align: justify">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The effect on our results of operations of
recording share-based compensation expense for the three and nine months ended November 30, 2012 and 2011 was as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; text-align: justify">Selling and marketing</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 9%; text-align: justify">379,756</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 9%; text-align: justify">1,043,590</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 9%; text-align: justify">1,407,393</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 9%; text-align: justify">2,104,527</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Technology and development</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">272,621</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">425,449</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">882,591</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">857,970</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.2pt; text-align: justify">General and administrative</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">534,876</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">846,961</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">1,389,460</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: justify">1,708,001</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.4pt; text-align: justify">Total stock-based compensation expense</td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">1,187,253</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">2,316,000</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">3,679,444</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; text-align: justify">4,670,498</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of activity for Augme’s stock
options is presented below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Number of</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Options</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Exercise Price</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Average Remaining Contractual Term</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>(In Years)</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 56%; text-align: justify">Options outstanding at February 29, 2012</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 10%; text-align: justify">20,153,219</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 10%; text-align: justify">2.13</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 15%; text-align: justify">3.81</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Granted</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2,850,268</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1.48</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Exercised</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">(572,092</td>
<td nowrap="nowrap" style="text-align: justify">)</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.53</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: justify">Forfeited, cancelled and expired</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">(3,964,603</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify">)</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify">2.41</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Options outstanding at November 30, 2012</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">18,466,792</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2.04</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3.22</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Options vested and expected to vest at November 30, 2012</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">17,570,483</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2.03</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3.18</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Options exercisable at November 30, 2012</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">12,491,061</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1.96</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2.84</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The estimated fair values of our stock warrant
awards issued to service providers and employees were determined using the following weighted average assumptions:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; text-align: justify">Expected dividends</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">0</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Term (in years)</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">5.00</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">4.75</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3. 9</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Weighted-average volatility</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">65.00</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">81.32</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">64.37</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">77.80</td>
<td nowrap="nowrap" style="text-align: justify">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Risk-free rate</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.62</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.40</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.59</td>
<td nowrap="nowrap" style="text-align: justify">%</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">0.40</td>
<td nowrap="nowrap" style="text-align: justify">%</td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The warrant expense for the three and nine
months ended November 30, 2012 and 2011 is as follows, and is included in general and administrative expense:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Three Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nine Months Ended</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>November 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 52%; padding-bottom: 2.4pt; text-align: justify">Total warrant expense</td>
<td style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="width: 9%; border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">188,849</td>
<td nowrap="nowrap" style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="width: 9%; border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">1,193,943</td>
<td nowrap="nowrap" style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="width: 9%; border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">622,915</td>
<td nowrap="nowrap" style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="width: 1%; border-bottom: black 2.25pt double; text-align: justify">$</td>
<td style="width: 9%; border-bottom: black 2.25pt double; text-align: justify">2,339,790</td>
<td nowrap="nowrap" style="width: 1%; padding-bottom: 2.4pt; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The summary of activity for Augme’s warrants
is presented below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Number of Warrants</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Weighted</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Average</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Exercise Price</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">Average Remaining Contractual Term (In Years)</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td colspan="3" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 56%; text-align: justify">Warrants outstanding at February 29, 2012</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 10%; text-align: justify">10,787,641</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 10%; text-align: justify">1.86</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 15%; text-align: justify">2.99</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Granted</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3,187,499</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1.17</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Exercised</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">(1,000,000</td>
<td nowrap="nowrap" style="text-align: justify">)</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1.00</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: justify">Forfeited, cancelled and expired</td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Warrants outstanding at November 30, 2012</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">12,975,140</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1.76</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2.77</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Warrants vested and expected to vest at November 30, 2012</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">12,932,640</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1.76</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2.76</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Warrants exercisable and outstanding at November 30, 2012</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">12,312,642</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">1.76</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2.69</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the change in
Level 3 acquisition related contingent consideration liability measured on a recurring basis for the three months ended November
30, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>August 31,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>2012</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">Cash and Stock Payments</td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>(Gain)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> Included in Earnings</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">November 30, 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="3" style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Acquisition related contingent consideration</td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">10,999,890</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">(3,621,056)</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">(7,339,173)</td>
<td style="text-align: justify; font-size: 7pt">(1)</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">39,661</td>
<td style="text-align: justify"> </td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 3%"> </td>
<td style="width: 87%"> </td>
<td style="width: 8%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the change in
Level 3 acquisition related contingent consideration liability measured on a recurring basis for the nine months ended November
30, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>February 29,</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>2012</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">Cash and Stock Payments</td>
<td colspan="3" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>(Gain)</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> Included in Earnings</b></p></td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">November 30, 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="3" style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 46%; text-align: justify">Acquisition related contingent consideration</td>
<td style="width: 4%; text-align: justify">$</td>
<td style="width: 9%; text-align: justify">26,000,500</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 3%; text-align: justify">$</td>
<td style="width: 10%; text-align: justify">(13,761,109)</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 2%; text-align: justify">$</td>
<td style="width: 10%; text-align: justify">(12,199,730)</td>
<td style="width: 1%; text-align: justify; font-size: 7pt">(1)</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 6%; text-align: justify">$</td>
<td style="width: 5%; text-align: justify">39,661</td>
<td style="width: 1%; text-align: justify"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The pro-forma results of operations for the
nine months ended November 30, 2011 are as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">Nine Months Ended November 30, 2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 82%; text-align: justify">Revenues</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify">$</td>
<td style="width: 15%; text-align: justify">11,851,321</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Net loss</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">(21,985,225</td>
<td nowrap="nowrap" style="text-align: justify">)</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Weighted average common shares</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">82,905,010</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Basic and diluted net loss per share</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">(0.27</td>
<td nowrap="nowrap" style="text-align: justify">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the gross carrying
value of the components of intangible assets and accumulated amortization:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="18" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">As of November 30, 2012</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Weighted Average Amortization Period (In months)</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Gross</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Impairment Loss</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Transfer to Held for Sale</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" rowspan="3" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">Net Carrying Value</td>
<td nowrap="nowrap" rowspan="3" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="text-align: justify; font-weight: bold">Carrying</td>
<td nowrap="nowrap" style="text-align: justify; font-weight: bold"> </td>
<td style="text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="text-align: justify; font-weight: bold">Accumulated</td>
<td nowrap="nowrap" style="text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Amount</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Amortization</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-style: italic; font-weight: bold; text-indent: 18pt">Indefinite Lived Intangible:</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> Trade name</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify">Indefinite</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">8,700,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">8,700,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; font-style: italic; font-weight: bold; text-indent: 18pt">Definite Lived Intangibles:</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 28%; text-align: justify">Patent litigation</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">84</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">8,195,037</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">1,709,382</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">—</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">—</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">6,485,655</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Patents</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">120</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">10,974,393</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1,034,124</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">5,649,160</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3,500,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">795,109</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> Acquired technology</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">60</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">7,270,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2,102,250</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">5,167,750</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">Customer relationships</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">60-72</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">12,850,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">3,509,375</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">9,340,625</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">Software</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">36</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2,095,706</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2,095,706</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify"> Non-compete agreements</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">36</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">212,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">212,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: justify">Trade names</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify">24</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: justify">—</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: justify">Total intangibles</td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">50,341,136</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">10,702,837</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">5,649,160</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">3,500,000</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; text-align: justify">30,489,139</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="2" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="11" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">As of February 29, 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify; font-weight: bold">Weighted Average Amortization Period (In months)</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Gross</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Carrying</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Amount</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Accumulated</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Amortization</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify; font-weight: bold"> </td>
<td colspan="3" style="border-bottom: black 1.5pt solid; text-align: justify; font-weight: bold">Net Carrying Value</td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify; font-style: italic; font-weight: bold">Indefinite Lived Intangible:</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="3" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">   Trade name</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify">Indefinite</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">8,700,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">—</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">$</td>
<td style="text-align: justify">8,700,000</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify; font-style: italic; font-weight: bold">Definite Lived Intangibles:</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td nowrap="nowrap" style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 52%; text-align: justify">   Patent litigation</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">84</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">5,471,107</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">950,150</td>
<td nowrap="nowrap" style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 9%; text-align: justify">4,520,957</td>
<td style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">   Patents</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">120</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">6,340,300</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">292,297</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">6,048,003</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">   Acquired technology</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">60</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">7,270,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1,011,750</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">6,258,250</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">   Customer relationships</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">60-72</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">12,850,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">1,605,625</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">11,244,375</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">   Software</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">36</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2,095,706</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">2,095,706</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">—</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">   Non-compete agreements</td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">36</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">212,000</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">185,500</td>
<td nowrap="nowrap" style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify"> </td>
<td style="text-align: justify">26,500</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: justify">   Trade names</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify">24</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; padding-bottom: 1.2pt; text-align: justify">44,000</td>
<td nowrap="nowrap" style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: justify"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: justify">—</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: justify">Total intangibles</td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">42,983,113</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; padding-bottom: 2.4pt; text-align: justify">6,185,028</td>
<td nowrap="nowrap" style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; text-align: justify">36,798,085</td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Amortization in future fiscal periods is expected
to be as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 60%; text-align: justify">Remainder of 2013</td>
<td style="width: 1%; text-align: justify"> </td>
<td style="width: 3%; text-align: justify">$</td>
<td style="width: 35%; text-align: justify">1,411,869</td>
<td style="width: 1%; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">2014</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify">5,247,475</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">2015</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify">5,163,725</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: justify">2016</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify">5,014,517</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: justify">2017</td>
<td style="text-align: justify"> </td>
<td colspan="2" style="text-align: justify">2,997,523</td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.2pt; text-align: justify">Thereafter</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: justify">2,054,030</td>
<td style="padding-bottom: 1.2pt; text-align: justify"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 2.4pt; text-align: justify">Total</td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td>
<td style="border-bottom: black 2.25pt double; text-align: justify">$</td>
<td style="border-bottom: black 2.25pt double; text-align: justify">21,789,139</td>
<td style="padding-bottom: 2.4pt; text-align: justify"> </td></tr>
</table>
26000500
39661
10999890
-3621056
-13761109
-7339173
-12199730
11851321
-21985225
82905010
-0.27
13
80
1
-72533071
-87362012
3
2
0
8.5
6
1
0.80
75
48
0
2200000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
P3Y6M
P5Y
P3Y6M
P5Y
P5Y
P3Y
P4Y9M
P3Y10M24D
0.6500
0.7770
0.6238
0.7770
0.6500
0.8132
0.6437
0.7780
0.0043
0.0040
0.0044
0.0040
0.0062
0.0040
0.0059
0.0040
1187253
2316000
3679444
4670498
379756
1043590
1407393
2104527
272621
425449
882591
857970
534876
846961
1389460
1708001
188849
1193943
622915
2339790
20153219
18466792
10787641
12975140
2850268
3187499
-572092
-1000000
-3964603
17570483
12491061
12312642
2.13
2.04
1.86
1.76
1.48
1.17
0.53
1
2.41
2.03
1.76
1.96
1.76
P3Y9M17D
P3Y2M29D
P2Y9M7D
P2Y9M3D
P0Y
P0Y
P0Y
P0Y
P0Y
P0Y
P3Y2M5D
P2Y102M
12932640
P2Y11M26D
P2Y8M8D
13056707
4800000
300000
P2Y
P2Y2M12D
90000
0
0.61
0.61
.25
0.90
4.10
4.00
800000
800000
26000500
39661
6280000
300000
3550000
3.10
100000
200000
2330000
2520000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">The Company reviews goodwill for
impairment annually as of the first day of its fourth fiscal quarter, generally December 1<sup>st</sup>, and whenever events or
changes in circumstances indicate the carrying value of goodwill may not be recoverable. The goodwill impairment test involves
a two-step process. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value
of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value
of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure
the amount of impairment loss, if any. If the implied fair value of the reporting unit's goodwill is less than the carrying value,
the difference is recorded as an impairment loss.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 22.5pt"><font style="font-size: 10pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">The Company estimates the fair value
of its reporting units using a weighting of fair values derived most significantly from the income approach and, to a lesser extent,
the market approach. Under the income approach, the Company calculates the fair value of a reporting unit based on the present
value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating
margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost
of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the
business's ability to execute on the projected cash flows. The market approach estimates fair value based on market multiples
of revenue and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics
as the reporting unit. The weighting of the fair value derived from the market approach ranges from 0% to 50% depending on the
level of comparability of these publicly-traded companies to the reporting unit. When market comparables are not meaningful or
not available, the Company may estimate the fair value of a reporting unit using only the income approach.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">     </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">In order to assess the reasonableness
of the calculated fair values of its reporting units, the Company also compares the sum of the reporting units' fair values to
the Company’s market capitalization and calculates an implied control premium (the excess of the sum of the reporting units'
fair values over the market capitalization). The Company evaluates the control premium by comparing it to control premiums of
recent comparable market transactions. If the implied control premium is not reasonable in light of these recent transactions,
the Company will reevaluate its fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions.
As a result, when there is a significant decline in the Company’s stock price, as occurred during fiscal 2012, this reevaluation
could correlate to lower estimated fair values for certain or all of the Company’s reporting units.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="margin: 0"><font style="font-size: 10pt"> The Company has a single operating segment, however there two reporting
units for purposes of its goodwill impairment assessment, and all of the recorded goodwill is attributed to the Mobile Marketing
and Advertising reporting unit, which generates substantially all of the revenues and expenses of the Company. The second reporting
unit represents the Intellectual Property reporting unit, which does not contain any attributed goodwill</font>.</p>
15000000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On May 24, 2012, the Company acquired all of the common stock and
all of the preferred stock of Geos Communications IP Holdings, Inc. (“Geos IP”). The fair value of the consideration
given for the acquisition of the Geos IP stock was $4.2 million, which included $355,000 in cash and $3.8 million in Augme’s
common stock (1,860,465 shares at a price of $2.05 per share). The Company is indemnified against certain losses resulting from
breaches of any representation, warranty, covenant or agreement of Geos IP. In order to secure payment of any loss, the approximate
1.9 million shares of Augme’s common stock will be held for the benefit of the sellers in escrow for a period of up to 14
months following the closing date of the acquisition.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company’s former Chief Executive Officer, Paul Arena,
was a director of Geos Communications, Inc. (the “Parent”), which is the parent company of Geos IP, until March 8,
2010 and is an owner of the Parent’s common stock and options to purchase the Parent’s common stock. The Company’s
former director, Ernest W. Purcell, and Phillip C. Rapp, Jr., the Company’s former Executive Vice President of Strategic
Planning, are preferred stockholders of Geos IP. After the indemnification period is concluded, Mr. Purcell will receive 25,492
shares of the Company’s common stock and Mr. Rapp will receive 33,468 shares of the Company’s common stock as consideration
in the transaction. Mr. Arena did not receive any consideration in the transaction.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In September 2012, the Company issued a note payable in the amount
of $200,000 to Ernest W. Purcell, a former director. The Company also issued to Mr. Purcell warrants to purchase 50,000 shares
of common stock of the Company. The loan, which was used for working capital, was paid in full in October 2012.</p>
<p style="margin: 0pt"></p>
4200000
355000
3800000
-1860465
1900000
P14Y
25492
33468
200000
50000
2.05
3500000